(Reuters) - Digital Colony, a private equity firm backed by U.S. real estate investor Thomas Barrack and Digital Bridge Holdings, said on Wednesday it had raised $4.05 billion to invest in digital infrastructure, seeking to capitalize on new technologies such as 5G wireless networks.
Buyout funds focusing on infrastructure investments have typically put their money in physical assets such as airports, bridges and toll roads. Digital Colony’s fund illustrates how investors are now also seeking assets that support the digital economy driven by big data and artificial intelligence.
Mobile operators could invest around $480 billion globally between 2018 and 2020 to upgrade their networks, according to mobile communications industry body GSMA, underscoring the potential size of the investment opportunity.
“The digital infrastructure asset class is emerging, and a lot of funds are spending time in the space,” Digital Bridge Chief Executive and co-founder Marc Ganzi said in a telephone interview.
“The thematic related to digital, like cloud computing, AI, 5G, automated cars, which empower the digital economy, all require applications, storage and bandwidth.”
Digital Colony completed the fundraising at the maximum it could raise after having set a target of $3 billion, the firm said in a statement, confirming an earlier report by Reuters.
Digital Colony was set up in 2018 by Digital Bridge, which invests in communications infrastructure companies, and Colony Capital, where Thomas Barrack serves as executive chairman and chief executive.
The firm has already committed around half its capital in five deals in North America and Europe, people familiar with the matter said. Its largest deal so far was the roughly $8.2 billion acquisition of U.S. communications infrastructure provider Zayo Group in partnership with private equity firm EQT Partners.
The fundraising by Digital Colony comes after U.S. infrastructure funds attracted a record $37 billion in 2018, according to data provider PitchBook, amid a dearth of federal and state infrastructure funding for many projects.
Neither PitchBook nor industry tracker Preqin have data on funds raised specifically for digital infrastructure.
Reporting by Joshua Franklin in New York; Editing by Phil Berlowitz and Bernadette Baum