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US private capital giant KKR is targeting a 10-fold return on a potential multibillion-dollar sale of a decades-old company that provides cooling equipment for data centres, as the AI boom boosts valuations.
KKR is working with advisers on a sale of CoolIT Systems, a company that traces its origins back to 2001 and pivoted from producing liquid cooling systems for gaming computers to putting its technology to work to support AI infrastructure, according to people familiar with the matter.
The New York-based private capital group was hoping that CoolIT could fetch a price tag in excess of $3bn, the people said, a massive jump from the $270mn valuation when KKR bought a majority stake in 2023. Abu Dhabi’s sovereign investor Mubadala owns a minority stake.
The vast build-out of data centre infrastructure to support the growth of hyperscalers and the rollout of AI has sparked a surge in dealmaking well beyond the technology sector. There has been a significant pick-up in energy and industrial deals involving suppliers to AI infrastructure.
A potential sale of CoolIT was at an early stage and there were no guarantees that it would result in a transaction, the people said. Several strategic buyers had been earmarked as potential bidders, they added.
KKR and Mubadala declined to comment. CoolIT did not immediately respond to requests for comment.
Nearly 3,000 data centres are under construction or planned in the US, adding to the 4,000 existing sites, boosting potential demand for CoolIT’s services, according to the American Edge Project, a technology advocacy group. However, investors have begun to fret about the potential return on investment from the huge amounts of cash pumped into building data centres by hyperscalers and infrastructure funds.
Last year, industrial manufacturer Eaton paid $9.5bn to buy Boyd Corporation’s thermal business to boost its services catering for data centres by buying a business expected to generate nearly $1.7bn in sales this year, most of which is from liquid cooling services. Competitor Vertiv also bought thermal management company PurgeRite for about $1bn last year.
Earlier this week, private equity investors Global Infrastructure Partners, which is owned by BlackRock, and EQT struck a $33bn deal to take utility group AES Corporation private, adding a business that generates vast amounts of renewable power to meet the huge electricity demands from data centres.
KKR has been one of the most aggressive private capital acquirers of data centres in recent years. It took US data centre operator CyrusOne private alongside GIP in 2021 in a deal valued at about $15bn including debt.
