Apollo Funds to Acquire Majority Stake in Stream Data Centers, Forming a Scaled Digital Infrastructure Leader

In a move that underscores the monumental shift in global infrastructure priorities, Apollo (NYSE: APO) today announced a definitive agreement for Apollo-managed funds (“Apollo Funds”) to acquire a majority interest in Stream Data Centers (“SDC”). This landmark transaction positions the newly formed partnership to become a dominant force in the rapidly expanding digital infrastructure landscape, with Apollo’s capital engine fueling Stream’s extensive development pipeline to meet unprecedented demand from the world’s largest technology companies.

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This deal is far more than a simple acquisition; it’s a strategic alignment of a proven, agile data center developer with one of the most powerful financial forces in the private markets. Stream Data Centers’ leadership will retain a minority stake and continue to steer the company, ensuring a seamless transition and continuity of its deep industry expertise. The partnership is designed to dramatically accelerate Stream’s multi-gigawatt development pipeline and enable the deployment of billions of dollars into critical U.S. infrastructure.

“Stream Data Centers represents a landmark digital infrastructure transaction for Apollo,” said Apollo Partners Joseph Jackson and Trevor Mills. “With deep development expertise and a valuable long-term land fund in key growth markets, we believe SDC is uniquely positioned to serve the infrastructure needs of the world’s most sophisticated technology customers. Apollo will bring scaled capital and structuring capabilities to help drive recurring origination across our ecosystem.”

For Stream’s part, Co-Managing Partners Michael Lahoud and Paul Moser expressed enthusiasm for the new chapter. “This symbiotic relationship with Apollo amplifies our existing strength, offering access to the capital required to significantly scale our developments at the rate hyperscale customers demand,” they stated. “We look forward to working with the Apollo team to execute on our pipeline.”

The Unprecedented Surge in Digital Infrastructure Demand

To understand the magnitude of this transaction, one must first grasp the seismic shifts occurring in the global digital landscape. The data center industry, once a quiet corner of the commercial real estate world, is now at the epicenter of a new industrial revolution. This boom is primarily fueled by two powerful, intertwined forces: the insatiable growth of hyperscale cloud computing and the explosive rise of generative artificial intelligence (AI).

The AI and Cloud Imperative

Leading research from sources like Goldman Sachs and McKinsey & Company paints a clear picture of the dramatic increase in demand. As of early 2025, the global data center market consumes an estimated 55 gigawatts (GW) of power. However, forecasts project this number will increase by an astonishing 165% by the end of the decade, reaching approximately 146 GW. This growth is not linear; it is exponential, driven almost entirely by the needs of advanced AI workloads.

Generative AI models, such as large language models (LLMs), require a new class of compute power. Unlike traditional data processing, training these models involves trillions of data points and requires thousands of high-performance Graphics Processing Units (GPUs) working in parallel. This intense computational load translates directly to a massive and unprecedented demand for electricity. The power density of servers—the amount of power consumed per square foot—is skyrocketing. A decade ago, a 30-megawatt (MW) data center was considered a large-scale project. Today, facilities of 200 MW are becoming standard, and some projects, such as the rumored “Stargate” AI supercomputer, are expected to require multiple gigawatts of power—enough to power a small city.

This creates a critical supply deficit. The International Energy Agency (IEA) recently projected that global electricity demand from data centers is set to more than double by 2030, consuming as much power as the entire country of Japan does today. The United States, which hosts more than half of the world’s data centers, could see data centers account for up to 13% of its total electricity consumption by 2030, up from 4% in 2024. This trend is creating a crucial bottleneck in new data center development, as the ability of utilities to expand transmission capacity is constrained by permitting delays, supply chain issues, and the sheer cost and time required to upgrade the electrical grid.

Hyperscale and the “Land Fund” Model

In this high-stakes environment, the market has shifted toward hyperscale data centers—massive campuses designed to serve a single, large tenant, typically a major cloud provider like Amazon Web Services (AWS), Google Cloud, or Microsoft Azure, or an AI innovator like OpenAI. The Apollo-Stream partnership is perfectly tailored to this model.

A key component of this strategy is Stream’s “data center land fund.” This isn’t just a pool of money for buying land; it’s a specialized vehicle designed to proactively identify and acquire properties that meet the stringent requirements of hyperscale development. These sites are not only large but, more importantly, are “long-term powered land,” meaning they have secured access to the immense power required to operate at a multi-gigawatt scale. Stream’s Headwaters affiliate is the team responsible for building this strategic land bank, mitigating risk by securing and vetting shovel-ready sites in advance of customer demand. The new capital from Apollo and Stream Realty Partners will be crucial in accelerating the development of these sites, moving them from land-in-hand to operational campuses much faster than would otherwise be possible.

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Apollo’s Expanding Infrastructure Ecosystem

Apollo’s decision to acquire a majority stake in Stream is a natural extension of its broader investment thesis, which views digital infrastructure as a core pillar of the modern economy. The firm has long been a leader in deploying capital into critical infrastructure assets and sees the data center sector as a prime area for long-term, high-yield investment.

Since 2022, Apollo-managed funds have deployed approximately $38 billion into next-generation infrastructure investments. While the Stream deal marks its first direct, control-oriented investment in a data center company, the firm has been an active player in the space. In a similar strategic move, Apollo acquired Argo Infrastructure Partners, which bolstered its holdings in data center-related assets. The firm has also been a key capital provider to other market participants, including a significant financing package for Meta Platforms’ U.S. data center expansion.

This experience and vast capital base give Apollo a distinct advantage. Its ability to underwrite and finance capital-intensive, multi-decade projects is a critical differentiator in an industry where grid interconnection delays can stall a project for years. By leveraging its own capital and structuring capabilities, Apollo can not only fund Stream’s development but also drive recurring origination across its extensive ecosystem, which includes other portfolio companies and strategic partners.

Stream’s Strategic Pipeline: A Roadmap for Growth

With Apollo’s backing, Stream Data Centers is now in an even stronger position to execute on its robust pipeline. The company already controls over 4 gigawatts of long-term powered land and has delivered more than 20 campuses to date. The immediate focus is on accelerating the development of 650 MW of near-term power capacity across campuses in three key markets: metro Chicago, Atlanta, and Dallas.

These locations are not chosen by chance; they are strategic hubs for digital commerce and AI.

• Dallas: As the home base for Stream and a major technology hub, the Dallas-Fort Worth area offers a skilled workforce, a strong business environment, and a central location that is crucial for network connectivity. The region has consistently ranked as one of the top data center markets in the U.S.
• Chicago: The Chicagoland area is a critical nexus for financial services and telecommunications, making it a prime location for data centers that require low latency and high reliability. The proximity to major fiber routes and a significant enterprise presence make it a highly desirable market.
• Atlanta: The Atlanta metro area has rapidly emerged as a Tier 1 data center market. Its strategic position in the Southeast, combined with a burgeoning tech sector and a relatively stable power grid, makes it an attractive location for both hyperscale cloud and AI providers looking to expand their footprint.

Stream’s long-standing reputation for building, leasing, and operating high-quality, hyperscale facilities for Fortune 100 customers provides a strong foundation for this new growth phase. Its focus on wholesale colocation and build-to-suit facilities allows it to cater to the specific needs of its demanding clientele, from custom designs to advanced cooling systems required for the high-density racks used in AI computing.

The Broader Context: Private Equity’s Role in a Digital World

The Apollo-Stream deal is a prime example of a broader trend: the increasing role of private equity in funding and consolidating digital infrastructure. As seen in other major recent transactions, private capital is seen as the ideal partner to address the immense capital requirements and long-term investment horizons of this sector.

Since 2021, private equity firms have been responsible for the three largest data center mergers and acquisitions (M&A) in the industry’s history, according to reports from financial research groups. These include:

• Blackstone’s A$24 billion acquisition of AirTrunk, a company operating hyperscale centers across Asia-Pacific.
• Kohlberg Kravis Roberts (KKR) and Global Infrastructure Partners’ $15 billion acquisition of CyrusOne.
• DigitalBridge and IFM Investors’ $11 billion acquisition of Switch, Inc.

This influx of private capital highlights a fundamental shift in how the market views data centers. They are no longer just specialized real estate; they are now recognized as critical infrastructure assets, akin to toll roads, airports, or power plants. These assets offer stable, long-term cash flows through multi-year leases with creditworthy, “blue-chip” tenants. As a result, they have become a highly attractive investment class for firms like Apollo, which are seeking resilient, high-growth assets to deploy their vast pools of capital.

A Synergistic Future and What to Watch For

The partnership between Apollo and Stream Data Centers is an embodiment of this market evolution. It unites Stream’s operational expertise and shovel-ready development pipeline with Apollo’s financial muscle and strategic capabilities. The transaction, which is subject to customary closing conditions and is expected to be completed in 2025, sets the stage for a period of aggressive expansion.

As the industry moves forward, several key areas will be crucial to watch. The partnership’s ability to secure reliable, low-cost energy—including renewable options—will be a major differentiator, given that electricity is the largest operational expense for data centers. The successful execution of the 650 MW pipeline in Chicago, Atlanta, and Dallas will be an important early indicator of the partnership’s effectiveness.

Ultimately, this deal represents a confident and calculated bet on the future of technology. As the world becomes more data-driven and AI becomes an indispensable part of business and daily life, the demand for the physical infrastructure that powers it will only continue to grow. The Apollo-Stream partnership is a powerful example of how the financial world is mobilizing to build that future, one gigawatt at a time.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

7th August, 2025