In a significant move to further strengthen its market position, Flexential, a leading provider of secure and scalable data center solutions, has announced a major strategic investment from Morgan Stanley Infrastructure Partners (MSIP). This substantial investment, which is also supported by the continued backing of GI Partners, marks a pivotal moment in Flexential’s growth trajectory, as the company aims to expand its digital infrastructure capabilities and meet the surging demand for data center services in an increasingly digital world.

This investment underscores the growing importance of digital infrastructure as businesses across industries continue to embrace cloud computing, artificial intelligence (AI), and digital transformation initiatives. With data centers at the heart of this technological shift, Flexential’s role in providing flexible and secure infrastructure solutions is becoming even more critical.

Investment to Accelerate Flexential’s Growth

The new infusion of capital from MSIP will enable Flexential to accelerate the expansion of its national FlexAnywhere® platform, which currently spans more than 40 highly connected data centers across the United States. With over 325 MW of built and under-development capacity, Flexential’s infrastructure plays a key role in supporting enterprise digital transformation, cloud adoption, and the growing needs of hyperscale and AI workloads.

This growth is expected to be transformative for the company, allowing it to further enhance its data center offerings and strengthen its market position as a leader in the digital infrastructure space. With enterprises relying heavily on data centers to store, manage, and process vast amounts of data, Flexential’s services are in high demand as organizations increasingly prioritize secure and scalable solutions to keep pace with the rapid growth of data and the complexities of modern IT environments.

Christopher Ortega, Head of Americas at MSIP, emphasized Flexential’s commitment to innovation and next-generation infrastructure as key factors in the firm’s decision to invest. Ortega stated, “We are excited to partner with Flexential at this critical moment in the company’s evolution. We believe Flexential’s robust next-generation infrastructure, commitment to innovation, and proven leadership in the industry make it well-positioned to capitalize on market opportunities. We look forward to supporting the company’s continued growth and success in the years to come.”

Strategic Partnership to Strengthen Flexential’s Market Leadership

With Morgan Stanley Infrastructure Partners now joining GI Partners as a co-control investor, Flexential has a strong foundation to push forward its ambitious growth plans. The transaction will provide the company with a substantial amount of primary capital to fund its continued expansion efforts, which include building out additional data center capacity and enhancing its offerings to meet the needs of enterprises across sectors.

The investment also highlights the growing trend of infrastructure-focused investment firms pouring capital into data centers, which have become critical assets in the digital economy. Data centers serve as the backbone of the internet, cloud services, and digital applications, making them indispensable for businesses that rely on technology to drive their operations. Investors are recognizing the value of these assets, especially as demand for digital infrastructure is projected to grow exponentially in the coming years.

Flexential CEO Chris Downie expressed optimism about the new partnership, stating that it positions the company for future strategic opportunities. “The new partnership with Morgan Stanley Infrastructure Partners, combined with the strong foundation laid with GI Partners, represents a tremendous opportunity for Flexential to further accelerate our growth trajectory and sets the stage for future strategic opportunities. As we continue to invest in expanding our infrastructure and delivering innovative solutions to our customers, this additional investment will enable us to build on our recent successes and further strengthen our position as a leader in the data center and digital infrastructure industry,” Downie said.

The Growing Demand for Data Centers and Digital Infrastructure

The global demand for data centers has been surging in recent years, driven by the explosion of data, the rise of cloud computing, and the need for robust, secure infrastructure to support new technologies such as AI, machine learning, and the Internet of Things (IoT). According to market research, the global data center market is expected to grow at a compound annual growth rate (CAGR) of 10.9% from 2021 to 2028, reaching an estimated $143.4 billion by the end of that period.

One of the major factors driving this growth is the adoption of hybrid cloud solutions, which allow businesses to leverage both public and private cloud resources. As companies increasingly move their workloads to the cloud, they require data centers that can support their evolving IT needs, particularly in terms of security, scalability, and flexibility.

Flexential’s FlexAnywhere® platform is well-positioned to address these demands, providing enterprises with a secure and scalable solution that can adapt to their needs as they grow. The platform’s high level of connectivity and its presence in key markets across the U.S. make it an attractive option for businesses looking to optimize their digital infrastructure.

A Strategic Focus on Hyperscale and AI Workloads

Flexential has also been focusing on hyperscale customers—those that require massive amounts of computing power and storage, such as cloud service providers, tech giants, and large enterprises with significant data processing needs. The company’s infrastructure is designed to support these customers, who are often at the forefront of innovations in AI, machine learning, and other cutting-edge technologies.

The rise of AI workloads, in particular, has been a major driver of demand for data centers. AI applications require substantial computational power to process and analyze large datasets, and as more companies integrate AI into their operations, the need for data centers capable of handling these workloads has grown rapidly. Flexential’s focus on AI and hyperscale customers positions it to capitalize on this trend and attract new business from companies that rely on AI-driven insights to stay competitive.

The Role of Infrastructure Investment in the Digital Economy

The partnership between Flexential, MSIP, and GI Partners reflects a broader trend in the investment landscape, where infrastructure funds are increasingly targeting digital assets. As more aspects of the global economy become digitized, data centers, fiber networks, and other digital infrastructure assets are seen as critical enablers of economic growth.

Infrastructure investors, such as MSIP, are drawn to these assets because they offer stable, long-term returns in a sector that is expected to see continued demand growth. The pandemic further accelerated the digital transformation of industries, with businesses shifting to remote work, digital services, and cloud-based solutions. This shift has reinforced the importance of digital infrastructure, making it a key area of focus for investors looking to capitalize on the growth of the digital economy.

For Flexential, the backing of two major infrastructure investors provides the company with the resources and expertise needed to scale its operations and expand its footprint in the U.S. market. With demand for data center services expected to remain strong in the coming years, Flexential is well-positioned to capture a growing share of the market and continue its trajectory as a leader in the digital infrastructure space.

Looking Ahead

The partnership between Morgan Stanley Infrastructure Partners, GI Partners, and Flexential marks a significant milestone in the evolution of the company. With substantial new capital and a clear strategic focus on growth, Flexential is poised to expand its data center capacity, enhance its product offerings, and strengthen its market leadership.

As businesses increasingly rely on data centers to support their digital operations, Flexential’s role in providing secure, flexible, and scalable infrastructure solutions will become even more critical. With a strong foundation and the backing of leading infrastructure investors, the company is set to continue its rapid growth and play a key role in shaping the future of the digital infrastructure landscape.

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By: Montel Kamau

Serrari Financial Analyst

23rd October, 2024