Investors Take Over 365 Data Centers, What's Next?

A pair of private investors has acquired 365 Data Centers, a colocation provider with facilities in eight US markets, most of them tier-two locations.

The investors are Dublin, Ireland-based Chirisa Investments and Connecticut-based Lumerity Capital. In the announcement, they’ve indicated that this is just the start, and that more acquisitions are in store.

The market continues to consolidate, and the new owners are likely to be on the look-out for more roll-up opportunities, similar to the ones pursued by another recently emerged consolidator, Digital Bridge, which since last year has acquired DataBank, C7 Data Centers, and Vantage Data Centers, as well as two 365 facilities in Cleveland and Pittsburgh.

Opportunity at the Edge

365’s play has been largely focused on edge colocation services, providing space for servers that cache content in secondary markets so that content providers don’t have to pay for backhauling it from far-away hubs. The edge cuts in the opposite direction too: data collected from end-user devices needs to be stored and analyzed somewhere close to those end users, both to improve performance and to save on backhaul bandwidth. Those devices -- the Internet of Things – can include everything from household appliances today to autonomous vehicles in the future.

At least one analyst told Data Center Knowledge the company’s best bet going forward is to use the access to capital it gained through the acquisition to continue pursuing the edge strategy. Here’s IDC’s research manager Kelly Quinn:

The Services Opportunity

There’s also an opportunity for 365 in beefing up its service portfolio beyond colocation, which is something the company mentioned it would do in its announcement.

Here’s Jabez Tan, research director at Structure Research:

Current 365 data center locations:

Key metrics:

Market Hooks across the Pond

One of the investors, Chirisa, is headed by Colm Piercy, who is also a chairman of Dataplex, a wholesale data center provider in Dublin. In a statement, Piercy said:

A Turnaround

365’s new CEO is Bob DeSantis, who co-founded Xand, a data center provider acquired in 2014 by TierPoint, one of the most successful secondary-market data center roll-up plays in recent years.

Stefanie Williams, associate analyst at 451 Research, noted that the company under new leadership appears to be changing course, from contraction to expansion: