Q&A: Data centre M&A in 2026
May 2026 | SPECIAL REPORT: MERGERS & ACQUISITIONS
Financier Worldwide Magazine
May 2026 Issue
FW discusses data centre M&A in 2026 with Elena Rubinov, David Martin, Vinita Sithapathy, Alaister Johnson and Yelena Nersesyan at Linklaters LLP.
FW: What major trends are currently shaping the digital infrastructure sector? How would you describe the current appetite for data centre M&A among operators and investors?
Rubinov: The digital infrastructure sector has experienced unparalleled growth in the last few years. While the US is leading this growth, in recent years, growth in this sector in Europe and Asia has also been significant. US data centre growth is the main driver for growth of the sector, with global data centre construction expected to double by 2030 compared to 2024 levels. This demand is primarily driven by growth of generative and now agentic, artificial intelligence (AI) and non-AI workloads, such as file storage and sharing, alongside the increasing shift of enterprise workloads to the cloud, wide-scale adoption of digital services, growth in the number of connected devices and the internet of things, as well as demand for low-latency compute power needed to run autonomous systems, retail systems and immersive applications across various geographies. This surging demand is happening in an environment characterised by consolidation and growth in existing markets and expansion into new markets, such as the recent investments by Microsoft, Alphabet, Meta and Amazon in India.
Sithapathy: Increasing attention to data localisation and data sovereignty, government and private sector initiatives supporting growth of digital infrastructure and energy production, such as the continued expansion of state and local tax incentives in the US, as well as a growing trend of data centre operators outsourcing non-core operational functions such as cooling and energy management software, is expanding the digital infrastructure ecosystem. Additionally, while cloud computing has historically been viewed as elastic, with customers gaining on-demand access to virtually unlimited capacity, increasing compute demand, some of which requires hyperscale data centres with specialised processors – for AI demands, for instance – and low-latency needs, requiring smaller and more flexible edge facilities distributed across more locations, have led to more joint ventures in the sector and tenants seeking customised terms on scalability and service levels. This momentum has translated into M&A activity, including Blackstone’s $24bn acquisition of the AirTrunk platform in Asia, and the largest data centre deal in history – Macquarie’s $40bn sale of Aligned Data Centers in the US.
Martin: Appetite for data centre M&A remains strong, underpinned by sustained demand for compute, storage and connectivity, but it is increasingly selective. Investment activity continues across the digital infrastructure stack, from core data centre facilities to networks, storage, compute and supporting supply chains. While deal volume softened in 2025 compared to 2024, overall deal value increased, driven by larger, higher-valuation transactions. This reflects continued optimism among dealmakers, balanced by investor caution around pricing and execution risk. Structurally, capital deployment is evolving and operating platforms are divesting stabilised assets for investment by long term yield type investors. Colocation developers are playing a growing role as hyperscalers increasingly favour leasing over ownership, while joint ventures between customers, operators and real estate or infrastructure investors are increasingly used to share risk and deliver capacity at scale. Additionally, financial investors are broadening their focus beyond core data centre assets to adjacent real estate and services businesses that support data centre development and operations.
“Developers and investors often negotiate tax incentives and other economic development arrangements, which can improve project economics but may carry performance and reporting obligations.”
FW: How has the growth of artificial intelligence – particularly generative AI – changed data centre operations? To what extent is it accelerating consolidation and acquisition activity?
Sithapathy: Generative and agentic AI is one of the most significant technological innovations impacting data centres in recent times. The impact of this technology is expected to far outstrip that of the compute and storage technologies introduced by mainframes in the 1960s, the fundamental changes introduced by the internet, and the wide-scale adoption of mobile and cloud technologies. The rate of adoption of generative AI is expected to be six times faster than adoption of personal computers and two times faster than the adoption of mobile phones.
Johnson: Training AI models requires a significant amount of compute power, and that has been doubling every three to four months. Additionally, AI workloads require a different GPU-based compute infrastructure and the growth in generative – and now agentic – AI has necessitated significant changes to data centre operations at every level, from chip design to the focus of investments in the subsector. For AI-focused data centres, servers consume significantly more power, with each server consuming 10 to 20 times the power consumed by a general-purpose server. Additionally, those data centres have significantly less downtime, with only about 5 minutes of downtime a year. Similar to other high-performance workloads, AI-focused data centres also have very high rack densities, and now require specialised capabilities for cooling and advanced energy management systems.
Rubinov: The growth of generative and agentic AI has reshaped the data centre sector in three important ways. First, the growth of AI has significantly increased the scale of individual transactions, from investments in 20 megawatt facilities to investments in facilities whose capacity needs to be measured in gigawatts, such as Meta’s $30bn Hyperion data centre campus. Second, private equity (PE) sponsors are increasingly seeking exposure to hyperscale developments, AI-focused colocation providers and modular platforms, as seen in a KKR-led consortium’s agreement this February to acquire STT GDC, an AI-capable data centres company, for $10.9bn. Third, deal structures in the sector also significantly evolved in 2025, with joint ventures between customers, real estate investors and operators becoming more prevalent, as well as a material uptick in stabilised asset transactions. Many of these joint ventures tend to provide for phased project development and deployment of large amounts of capital.
“One of the key features of the data centre market in Asia is that it remains partnership-driven, with local partners helping international operators deal with permitting and siting issues.”
FW: What are the main factors influencing valuations, deal structures and strategic decision making in today’s data centre M&A market?
Martin: Although access to suitable land and long-term contracted revenue remain fundamental value drivers, the single biggest factor shaping valuations and strategic decision making today is access to reliable, scalable power, which is increasingly clean power, alongside certainty of delivery. Assets with secured grid connections, advanced interconnection queue positions, credible utility commitments and a clear path to near-term energisation are commanding valuation premiums, while sites with speculative power, long lead times or unclear upgrade requirements are being discounted or avoided. This is reinforced by tighter utility practices in some markets, including significant deposits and stricter reservation terms, which increase the cost of ‘banking’ power and elevate execution risk. As a result, acquirers are prioritising power-derisked platforms that can scale across land, power and permitting, support higher-density workloads, and deliver capacity on realistic timelines, with greater diligence focused on grid rights, phased capacity ramp-up and clean-power strategies underpinning growth.
Sithapathy: Investors consider various other strategic factors, such as required regulatory approvals like local zoning and land use approvals and Federal Energy Regulatory Commission approval for certain energy infrastructure. They also consider relationships with suppliers – for example, for data centres powering AI workloads, this includes access to state of the art high-performance chips and other equipment such as graphics processing units – and access to government incentives, such as state and local tax incentives. With some data centre companies or projects valued at tens of billions of dollars, investments through consortiums with multiple investors are common. Another emerging transaction structure involves using a special purpose vehicle (SPV) that obtains third-party debt such that the debt is not reflected on the developer’s balance sheet. For example, for Meta’s 4 million square foot Hyperion data centre, following discussions with ratings agencies and, according to Bloomberg, the US Securities and Exchange Commission (SEC), the $26bn in debt is not reflected on Meta’s balance sheet.
Johnson: As rack density and technical requirements, such as cooling, have increased, data centre leases continue to be customised – including on a retrofit basis where leases are currently in flight – to address heightened service levels, scalability and resiliency standards. Data centre customer arrangements generally have various unique aspects and take different forms depending on the nature of the data centre – for example, in some markets these will be service contracts rather than leases for tax reasons. Further, because of the significant impact on revenue, the quality – including creditworthiness – of the lease counterparty and the strength of the lease protections have become key considerations in valuation, with some PE firms citing ‘airtight’ leases as prerequisites for their investments. Construction of data centres typically only starts after a long-term tenant is locked in, and tech companies are generally willing to enter 10-15-year leases for data centre space at the outset. This contracted long-term revenue is also key when seeking third-party debt financing and other financing solutions, such as asset-backed securitisations.
“The rate of adoption of generative AI is expected to be six times faster than adoption of personal computers and two times faster than the adoption of mobile phones.”
FW: What specific due diligence challenges arise in data centre transactions? How much specialist industry knowledge is typically required to address them effectively?
Rubinov: Data centre transactions involve significant commercial, legal, real estate, permitting, zoning, environmental, intellectual property, tax, data privacy and various other legal issues in addition to non-legal technical and business risks. Teams conducting due diligence in data centre transactions need a strong understanding of the sector to effectively identify and address issues. Because of concerns regarding availability and cost of power, technical and business teams will generally review the operational efficiency of the target and its operating models, and assess the operator’s energy management strategies. Teams must understand the risks surfaced in the course of due diligence and find effective legal, business or technical strategies to address them, such as if the planned data centre development is not compatible with all the zoning and land use restrictions applicable to the site, parties may need to engage the local authorities for any necessary variances or other exceptions.
Nersesyan: Many of the material risks in data centre development sit at the property level. Teams should conduct thorough title diligence to identify and address liens, easements, restrictive covenants, access or utility rights and other encumbrances that could constrain construction, expansion or operations. A detailed survey is essential to confirm boundaries, easements, setbacks and encroachments and to validate that planned improvements fit within the site’s legal and physical parameters. Zoning reviews are equally critical, including ensuring that data centre use, and associated substations, generators and cooling infrastructure, is permitted, or a use variance or special permit can be obtained on an acceptable timeline and with manageable conditions. Environmental due diligence should include assessing contamination, wetlands, flood risk and other site conditions that trigger remediation obligations or limit development. Additionally, developers and investors often negotiate tax incentives and other economic development arrangements, which can improve project economics but may carry performance and reporting obligations. These real estate factors, together with the factors discussed earlier, underpin the viability and long-term value of a data centre project.
Johnson: Legal due diligence also requires careful review of the data centre business’ contractual arrangements, in particular arrangements with customers, which are the primary revenue drivers of any data centre platform, and supply chain contracts, including in respect of operations and maintenance. Electricity supply agreements, such as power purchase agreements, must be reviewed to ensure regulatory compliance, account for longer interconnection timelines and identify any ‘take or pay’ arrangements. Supplier agreements must establish predictable and reliable access to servers, chips and other necessary equipment, with sufficient safeguards to prevent disruptions and appropriately allocate liability for system failures and breaches. Customer agreements require careful attention to, among other things, committed term, customer termination rights, delivery commitments and associated remedies, operator change of control and transfer restrictions, customer capacity reservation rights, rights of first offer and rights of first refusal, service levels and associated service credits, and customer step-in rights.
FW: How significant is the role of PE in driving data centre M&A? What recent PE deals illustrate the strategies currently being deployed in the sector?
Sithapathy: The rise in the number of digital infrastructure-focused funds relative to all new launches highlights the increased interest in investing in the sector. Some financial sponsors have significantly stepped up their role in the data centre ecosystem – for example, SoftBank’s acquisition of DigitalBridge moved SoftBank from primarily being a financial sponsor to direct ownership and operations. However, given the scale of new projects and amount of capital required to develop them, many dealmakers view financing the development of data centres as an entry point to investing in the sector, with some investors investing in early-stage projects or converting existing buildings into data centres and other developments. There is also growing attention to the fragmented facility services market and whether it is ripe for PE firms to undertake consolidation strategies such as roll-ups.
Martin: Building on these dynamics, PE is now a central driver of data centre M&A, deploying capital across the value chain, from development-led investments and platform acquisitions to services consolidation and structured financings. Sponsors are pursuing a range of strategies, including acquiring real estate or brownfield assets for conversion into data centres, building scaled operating platforms, and investing in services businesses that support development and operations. Recent examples include DigitalBridge’s acquisition of global hyperscale developer Yondr Group, the $4bn acquisition of atNorth by CPPIB alongside Equinix, and Brookfield-owned Data4’s €3.3bn debt financing to support expansion. PE capital is also being deployed through structured vehicles, such as Blue Owl’s Abilene project, where equity and project-level debt were invested via an SPV backed by a long-term lease, illustrating how sponsors are underwriting scale and development risk using contracted revenues.
“Appetite for data centre M&A remains strong, underpinned by sustained demand for compute, storage and connectivity, but it is increasingly selective.”
FW: Which legal and regulatory considerations are most important when investing in data centre assets? How might emerging rules on energy use and carbon reporting affect deal structures?
Nersesyan: In the US, developers of data centres are increasingly facing community pushback, particularly in suburban and rural areas. Local residents and officials often raise concerns about high energy and water consumption, the visual impact from large warehouse-style buildings, noise from cooling and backup systems, strain on local grids and infrastructure, and relatively low job creation compared with the scale of the development. This resistance can lead to stricter zoning and permitting requirements, moratoria on new data centres, political and media scrutiny, and longer and more uncertain project timelines. Data centre developers and hyperscalers therefore need to factor community sentiment, local political dynamics, infrastructure constraints and environmental sensitivities into early-stage site selection and related due diligence, and to build in proactive stakeholder engagement and mitigation strategies from the outset.
Rubinov: Selecting a data centre site requires careful review of applicable land use, zoning and water usage laws, which may impose restrictions on use, height, energy and water use and noise levels. Investors must also consider obligations under agreements with utility providers, such as power purchase agreements. For international or multinational projects, investors must assess compliance with foreign investment, trade controls and data localisation laws. In some cases, such factors may play a significant role in deciding where to invest in the first place. For example, when discussing its expansion into the UK and certain EU countries, CoreWeave noted, in SEC filings, its expectation that regulatory frameworks would increasingly restrict cross-border data flows and that there may be more data localisation, with AI models trained on regional data and served locally. There is also the technical imperative to reduce latency by locating servers closer to end users.
Sithapathy: In the US, three recent trends are worth noting. First, recent and proposed regulatory changes may impact the process and costs associated with interconnecting and providing power to data centres. This includes federal policies, such as pending rulemaking that could impact procedures for interconnection of large loads, regional electric market rule changes related to treatment of data centres co-located with an electric power source, and a patchwork of state-level initiatives that could result in higher or more specialised utility rates for data centres. Second, states such as California, Colorado and Virginia have introduced data localisation requirements, which may result in greater variation in data protection rules across US states. Lastly, the One Big Beautiful Bill Act, signed in July 2025, and actions by the current US administration, have significantly rolled back tax incentives and monetary grants associated with renewable energy projects, which could both increase energy costs and put significant pressure on the general economics of data centres.
Martin: In Europe, regulation is increasingly shaping both where capacity is built and how assets are financed. The EU’s revised Energy Efficiency Directive (2023) requires data centres with IT power demand of more than 500 kilowatts to report key sustainability and performance indicators, while the EU Taxonomy provides a framework that can influence whether projects are treated as ‘sustainable’ for investor and lender purposes. Alongside these obligations, EU policy is also geared toward enabling growth – aiming for carbon neutral data centres by 2030 and exploring measures to expand capacity through streamlined support and permitting. Market participants must also factor in the General Data Protection Regulation and related data protection requirements when designing operations and cross-border processing. These rules are increasingly feeding into deal structures through enhanced diligence, key performance indicator-based covenants and reporting undertakings, and, in some cases, pricing or financing terms linked to sustainability performance.
“Selecting a data centre site requires careful review of applicable land use, zoning and water usage laws, which may impose restrictions on use, height, energy and water use and noise levels.”
FW: Looking ahead to 2026 and beyond, how do you expect investment patterns in the data centre market to evolve? How might operators, investors and vendors futureproof their infrastructure and strategies?
Rubinov: Although high asset values and power constraints are headwinds for the data centre M&A market in the short term, the long-term outlook remains strongly positive. The trends that are driving growth in the data centre sector remain strong and contribute to the positive long-term outlook. For 2026 and beyond, there will remain a need for both hyperscale data centres and edge data centres. All these factors point to potential load growth in the US, and hyperscalers are looking to low-carbon sources of energy to meet the power demand. Various hyperscalers announced agreements related to nuclear energy in 2025 and we expect this trend to continue.
Martin: In Europe, three themes are likely to shape data centre investment in 2026 and beyond. First, capacity growth is expected to shift away from constrained FLAP-D markets – Frankfurt, London, Amsterdam, Paris and Dublin – as power and planning bottlenecks push capital toward secondary locations such as Barcelona, Lisbon and Vienna. Second, higher interest rates and long-duration assets are driving more disciplined underwriting, with investors favouring de-risked, contracted platforms and credible expansion pipelines. Third, energy efficiency and decarbonisation requirements will play a larger role in diligence and financing, even as EU initiatives seek to simplify permitting and support growth. To futureproof, operators and investors should prioritise power-secured sites, flexible high-density design and robust low-carbon energy strategies.
Johnson: In Asia, we are seeing growing demand for data centres, driven by population growth, the adoption of generative and agentic AI, data localisation and data sovereignty trends, and the technical need to reduce latency by locating data centres closer to the people using them. These trends have led to a step change in investment in data centres in the region, which we expect to continue in 2026. One of the key features of the data centre market in Asia is that it remains partnership-driven, with local partners helping international operators deal with permitting and siting issues. Like other geographies, ensuring long-term access to reliable power will remain a key factor in investing in and operating data centres.
Elena Rubinov is a corporate M&A partner and the head of US infrastructure and private capital M&A in Linklaters’ New York office. She represents financial sponsors, private capital investors and strategic companies on mergers, acquisitions, divestitures, investments, co-investments, joint ventures and restructurings across a wide range of sectors, with a special focus on energy, power and infrastructure. She can be contacted on +1 (212) 903 9051 or by email: elena.rubinov@linklaters.com.
David Martin is a London-based corporate M&A partner in Linklaters’ private capital group and global co-head of the telecoms, media and business services sector. He advises private capital investors, corporates and sponsors on complex, multijurisdictional digital infrastructure transactions, including data centres, fibre, towers and next-generation connectivity, with deep experience across M&A, consortiums, co-investments, exits, joint ventures and carve outs. He can be contacted on +44 (0)20 7456 3074 or by email: david.martin@linklaters.com.
Vinita Sithapathy is a corporate M&A partner in Linklaters’ New York office. She represents corporate and private equity clients on a broad range of domestic and cross-border transactions, including M&A, sales of companies and businesses, consortium transactions, private investments, joint ventures, management rollovers and reorganisations. She can be contacted on +1 (212) 903 9350 or by email: vinita.sithapathy@linklaters.com.
Alaister Johnson is a partner in Linklaters’ Asia technology team based in Singapore, having previously spent over a decade in the London office. He advises clients on a broad range of digital infrastructure, technology and data matters, with a particular focus on data centre and fibre transactions. His practice focuses on the digital infrastructure commercial arrangements, including hyperscaler contracts, fibre MSAs and towers MLAs. He can be contacted on +65 6321 5229 or by email: alaister.johnson@linklaters.com.
Yelena Nersesyan is a counsel in the real estate group in New York. She advises clients on joint ventures, acquisitions, dispositions, leasing and financing of commercial real estate, including data centres and other assets such as hotels, retail properties, industrial sites, office buildings and multifamily housing throughout the US. She also advises on real estate aspects of energy, infrastructure, corporate and restructuring transactions. She can be contacted on +1 (212) 9039184 or by email: yelena.nersesyan@linklaters.com.
© Financier Worldwide
THE PANELLISTS
Linklaters LLP