Halyard Capital Launches Digital Fortress

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A view of Mount Rainer from the roof of the digital.forest data center near Seattle, which is now part of Digital Fortress, a new provider formed by Halyard Capital. (Photo: digital.forest)

Private equity firm Halyard Capital has acquired two service providers in the Pacific northwest to create Digital Fortress, a new colocation company. Digital Fortress, which will be headquartered in Seattle,  consists of the merged operations of digital.forest and Fortress Colocation Services. The new company has also leased space in a downtown Seattle building for additional colocation space.

Halyard Capital has experience in the data center sector as an investor in Inflow, a managed hosting provider that targeted second-tier markets and was eventually sold to SunGard. Halyard says Digital Fortress will serve as "a platform for consolidating the highly fragmented data center marketplace in the Pacific Northwest."

digital.forest was founded in 1994, and provided database and application hosting services for small and medium-sized businesses. Both digital.forest and Fortress Colocation operate from data center space at Sabey Corp.'s Intergate.East in Tukwila, a suburb of Seattle that is home to a cluster of data centers.

Digital Fortress may also build new data centers or retrofit existing ones to expand its footprint. The company has leased 18,000 square feet of raised-floor space in a downtown Seattle location, and will offer 4 megawatts of space at the facility in July. The site on Western Avenue, formerly the home of Airborne Express and Isilon Systems.

“During the past few years, we have seen increasing demand in the market for high quality, power dense colocation services," said Robert Pistilli, Vice President at Halyard Capital. The trends is "driven by significant growth in digital information and enterprise migration towards IT outsourcing, as well as fundamental advancements in computing technologies, which Digital Fortress is uniquely positioned to deliver," said Pistilli.

Halyard is partnering with Meritage Funds and Sweetwater Capital in forming Digital Fortress. Mark Hughes, former Chief Financial Officer of Inflow Communications and Executive Vice President of Operations at SunGard Availability Services, will serve as Executive Chairman.

"Digital Fortress will differentiate its service offering by delivering high-density power applications serviced with a highly efficient and effective operating model," said Hughes. "We believe this model will deliver best-in-class infrastructure solutions comparable to nationally recognized competitors, but at a more attractive value to customers."

“The downtown Seattle colocation market has been underserved for some time," said Tim Doherty, former CEO of Fortress Colocation Services, who has joined Digital Fortress as its Corporate Chief Development Officer. "Digital Fortress will now be able to move its successful, high-density model to the downtown core and take advantage of the redundant capabilities available from Seattle City Light’s power distribution network to deliver services meeting Tier 3 datacenter standards."

Halyard Capital is a New York-based private equity firm with over $600 million of capital under management, focused on leveraged buyout and growth equity investment opportunities within the media, communications and business services industries.