Principal’s European data centre fund raises initial €155m

Principal Real Estate, the real estate investment arm of Principal Global Investors, raised €155 million from the first close of a closed-end fund for investing in data centre assets in Europe.

The initial capital raise of the Principal European Data Centre Fund beat its target receiving subscriptions from seven investors, including asset managers, pension funds, and insurance companies located in France, Germany, Spain, and Malaysia.

The amount is one-third of the total equity hard cap of €450 million which Principal has set for the fund.

Principal said the fund will focus on manage-to-core data centre assets and at least 60% of the fund will be allocated to core European markets Germany, Netherlands, France, United Kingdom, and Ireland. Up to 40% will aim at secondary markets such as Spain, Italy, and Switzerland.

Paul Lewis.

Globally, Principal Real Estate has expertise in data centre investment and its first data centre fund closed in the United States in June 2021, oversubscribed at €471.4 million.

Since entering the data centre market in 2007, Principal Real Estate has committed over €1.75 billion to data centre acquisitions and developments and has stakes in data centre REITs worth more than €1.18 billion.

“We have been evaluating the European data centre sector for the last 2-3 years, closely watching demand drivers such as advancements in technology and increased data consumption to determine the right time to launch a fund,” said Principal Real Estate director of European data centres Paul Lewis. “With the first close being above our target equity raise, we are in a strong position to achieve our goals for the final close and to begin executing on our acquisition plans across Europe.

“Data centres will remain appealing investment opportunities given their diversification benefits and strong risk/return profile, and we continue to believe there is intrinsic value in standing data centre assets across Europe’s primary and secondary markets given the long-term, structural tailwinds supporting the sector.”