What's Happening?
Spark New Zealand has finalized a deal to sell a 75% interest in its data center business to Pacific Equity Partners (PEP) for up to NZD584 million ($346.9 million). The transaction involves shifting Spark's data center assets and operations to a new standalone business named DC Co. Spark expects to receive NZD486 million ($287 million) in cash, with an additional NZD98 million ($57.8 million) contingent on performance-based criteria by the end of 2027. This strategic move aims to reduce Spark's net debt and secure capital for expanding its data center capacity by 120MW, enhancing its role in New Zealand's cloud and data hosting market.
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Why It's Important?
The sale of Spark's data center business to PEP is significant as it allows Spark to reduce financial strain and focus on expanding its data center capacity. This expansion is crucial for meeting the rising demand from enterprises and hyperscalers in New Zealand. By retaining a 25% stake, Spark continues to participate in the growing market, potentially increasing shareholder value. The deal also reflects Spark's ongoing strategy to reshape its asset portfolio and strengthen its balance sheet, following its earlier sale of a stake in tower operator Connexa.
What's Next?
The transaction is expected to close by the end of the year, pending regulatory and board approvals. Spark's new standalone business, DC Co, will operate with its own board and management team, focusing on expanding its data center network. Plans include a greenfield development on Auckland's North Shore and further extensions in South Auckland. This strategic investment positions DC Co to capture a significant share of the local data center market growth and attract international customers.
