Overview
Switch, Inc (Switch) operates 20 data centers across the US.
Funds advised by IFM Investors acquired a stake in Switch via a take-private transaction in December 2022, which was completed alongside DigitalBridge. Currently, DigitalBridge holds a majority stake in the company (55.8%), with Switch management holding 7.0%, and funds advised by IFM holding the remainder (37.2%).
Why did we invest in Switch?
Switch is well-aligned to our investment philosophy, providing us with the means to invest in what matters most – real assets that serve society’s needs:
An essential infrastructure asset
For the internet to function effectively, data centres are essential. And with advances in AI, demand for data centres only looks set to increase over the coming years.*
Growth potential
Switch’s data centres are in areas offering relatively low-cost land, power and labor (e.g. Las Vegas and Reno), while serving adjacent large and growing markets (e.g. southern California and Silicon Valley). Importantly, the expansion of existing campuses is at the heart of the company’s growth strategy.
Stability of customer base and revenue model
Strong customer retention then lends itself to stable cash flows. Switch has grown steadily over the last 20 years, holding its own through various market cycles.
* Global professional services company, McKinsey, estimates that global demand for data centres could reach 219 GW by 2030 (approximately quadrupling demand in 2023 and requiring investment of over $250B). See McKinsey & Company (2024), ‘AI power: Expanding data center capacity to meet growing demand’, 29 October.
Our active approach: What’s been the focus since 2022?
Private ownership has given Switch a new and accelerated growth trajectory. We believe the opportunity is huge – not only is demand for data centres increasing, Switch is also in a strong position relative to peers.
That said, to capitalize on this opportunity, Switch needs to successfully navigate a market that is dynamic and evolving. That’s where we come in:
Improving decision making and planning
We’ve worked directly with the Switch management team – along with the company’s sales, construction and finance teams – to develop tools for enhanced reporting and decision-making. This has been particularly useful in areas like capital expenditure and pricing – Switch has been able to take advantage of opportunities as they arise, in support of the company’s growth agenda.
Ensuring the right people are in place
As Switch has grown, so too have the demands on the company’s workforce. We have helped reshape the finance and project delivery teams, adding critical team members to ensure both are bought into the company’s strategic agenda.
Expanding access to capital markets
Demand for data centre capacity is accelerating. If data centres are to keep up, then they need access to large, well-priced debt markets. We’ve supported the expansion of Switch’s investor universe, using our relationships to help achieve optimal pricing and terms, underwriting the development of new facilities, and securing the financing required to deliver on contracted multi-year capacity growth for customers.
The outcome
- Greater efficiencies in reporting and decision making, providing the means for Switch to act more nimbly in pursuit of its ambitious growth targets.
- Alignment between Switch management and the company’s new shareholders.
- Critical teams that are well resourced, and supportive of the company’s strategic vision.
*Unless otherwise specified, all data included within this case study is sourced from IFM/Switch, Inc.
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Case studies are provided for illustrative purposes only and should not be relied on to make an investment decision. This case study was chosen to demonstrate IFM’s active approach to infrastructure investing on a pre and post investment basis. This material is provided for informational purposes only. The case study does not represent all investments made or recommended for IFM’s infrastructure equity and debt strategies. This material does not constitute an offer, invitation, solicitation, or recommendation in relation to the subscription, purchase, or sale of securities in any jurisdiction and neither this material nor anything in it will form the basis of any contract or commitment. Past performance does not guarantee future results. The value of investments and the income derived from investments will fluctuate and can go down as well as up. A loss of principal may occur. This material should not be distributed or provided to any other person without the written consent of IFM Investors. IFM-30APR2025-4340596