NOW Closed – Now closed to investment.
Spire Capital Limited (“Spire”) continues to have high conviction in select pockets of global private markets (i.e. ‘sweet spots’). This includes working in partnership with Valterra Partners LLC (‘Valterra’), to find attractive direct co-investment opportunities within the field of private equity infrastructure. More specifically, this means investment opportunities attached to essential services, underserved end-markets and long-term secular demand trends (e.g. data consumption).
As the world progresses through COVID-19 crisis, the resiliency of “Core” infrastructure assets is being tested as air travel, vehicle movements, energy demand and port throughput are all materially impacted. Meanwhile, data is proving to be essential to all sectors of the economy through the disruption. Data volumes in 2022 are forecast to be 3x those recorded in just 2017 and 11x 2012 as data intensity increases and use cases multiply. Internet users, connected devices and speeds continue to increase significantly, creating significantly more demand for data infrastructure services. The assets that provide the access to data (towers, fiber and datacenters) are increasingly being viewed as critical infrastructure to the economy. Data centres are increasingly being viewed as infrastructure assets because they possess many of the same key attributes as traditional core infrastructure investments including long term contracts, stable and predictable cash flows, high free cashflow generation and stable underlying demand drivers.
For the last 12 months, Spire has been working with Valterra to better understand the global landscape for data and the infrastructure that enables its transmission. Data Centres sit at the centre of the data infrastructure system as the point where crucial storage and computing takes place. In particular, data centres at the “edge”, i.e. close to major metropolitan areas and thus close to end consumers, are increasingly important as the internet architecture undergoes a significant transformation as a result of the requirement for zero latency from many users.
Within the data centre universe sits Retail Colocation whereby data centre services are offered to medium-large enterprises and to managed service providers for smaller enterprises. Currently, 60% of such enterprises do not locate in data centres, providing a significant opportunity for growth. Data centre colocation has numerous benefits (vs. having an on-premise ‘server closet’) including security, energy efficiency, networking, access to dark fiber, proximity of multiple ISPs, uninterrupted power supply and virtually 100% up-time. In addition, enterprise transition to retail colocation over traditional storage has been shown to reduce data storage and computing costs by 60-70%. Retail colocation services in edge locations also allow large enterprises to have smaller “points of presence” close to consumers with the lowest available latency.
Valterra has been working with telecommunications industry participants and consultants for many years including reviewing (and declining) dozens of opportunities within the sector over the past four years. Following extensive research, it became evident that real estate assets (i.e. wholesale datacenters and cell phone towers) had benefited from highly efficient institutional capital markets and trade on a relatively unattractive (tight) cap rates while requiring extremely large capital expenditure. At the other end of the spectrum, consumer facing telecommunications assets (often venture capital opportunities) remain vulnerable to low switching costs and high customer churn. To this end, Valterra clearly identified retail colocation as the optimal telecommunications infrastructure opportunity and set off to find an attractive investment. This culminated with the opportunity to invest alongside a world class management team in 1547 COLO, a retail colocation data centre business.
In early-June 2020, Spire finalised due diligence on Valterra’s US data centre strategy and associated co-investment opportunity with 1547 COLO. Spire has strong conviction that retail colocation services offered within high-quality data centres in attractive edge-market locations is the optimum way to capitalise on the secular demand trends for data.
To provide Australian investors with access to 1547 COLO, Spire has created the Spire US Data Centre Colocation Fund (AUD) (“the Fund”). The Fund will invest in 1547 via an underlying investment entity (Valterra Data Holdings LLC) created and controlled by Valterra Partners, a specialist lower mid-market private equity firm based in New York. The Fund will invest pari passu with Valterra’s interest in 1547 COLO. The Fund was established in June 2020 and serves as an AUD denominated Australian unlisted unit trust. The Fund will be a fully paid-in structure whereby 100% of capital commitments will be called upfront.
|Performance as at 31 October 2023||Net Returns*|
|Since Inception p.a.*||11.22%|
*Past performance is not an indicator of future performance. Performance table is based on the aggregated total application amount and units issued during the capital raising period and includes Unit Price growth from commencement of NAV based unit pricing following completion of capital raising in June 2021. Unit Price and performance do not include the value of Foreign Income Tax Offsets (FITOs) which have been distributed in addition to cash. Individual investor performance will vary according to the Application Price at which they were issued Units in the Fund, which in turn was based upon the AUD / USD exchange rate applicable on the day that an investment is accepted.
*Performance since inception is measured as the Internal Rate of Return since inception. The IRR is the annualised rate of return that equates the amount and timing of irregular cashflows since inception with the period end value. The IRR replaced the time weighted since inception return, effective from 30 June 2023.
|Date||Unit Price||Net Monthly Return*|
|31 October 2023||$1.7582||1.46%|