Information on the Target

Apollo has entered into an agreement to acquire a majority stake in Stream Data Centers (SDC) from Stream Realty Partners in a significant transaction that enhances Apollo's footprint in next-generation digital infrastructure. This acquisition aligns with Apollo’s strategy to invest substantially in the development of hyperscale data center campuses located in key Tier 1 and Tier 2 markets across the United States.

Stream Data Centers manages over 4 gigawatts of long-term powered land and boasts a strong development pipeline, having successfully delivered more than 20 hyperscale campuses to date. Their operational model emphasizes fostering long-term customer relationships while executing efficient and scalable builds tailored to the evolving requirements of cloud and artificial intelligence providers.

Industry Overview in the Target’s Specific Country

The digital infrastructure industry in the United States has seen substantial growth driven by the increasing reliance on cloud computing and data processing services. Major cities across the U.S. have become focal points for data center development due to their connectivity, access to power, and skilled labor forces. These factors have heightened competition among data center providers to capture market share in this expanding landscape.

Moreover, the rise of artificial intelligence and machine learning applications is intensifying demand for data capacity and processing power. Companies are seeking reliable and scalable data center solutions, which are crucial for managing vast amounts of data generated from these technologies. This trend is expected to continue as businesses increasingly rely on technology-driven solutions for their operations.

As sustainability becomes a priority, there is a growing emphasis on renewable energy sources and environmentally friendly practices within the industry. Data centers are increasingly incorporating measures to reduce their carbon footprints, thereby appealing to environmentally conscious investors and clients alike.

Regional disparities are evident, with Tier 1 markets often seeing more substantial investment due to their established infrastructure. However, Tier 2 cities are attracting attention as they offer competitive advantages such as lower operational costs and available land for expansion.

The Rationale Behind the Deal

This acquisition positions Apollo strategically within a rapidly expanding market where data centers are fundamental to modern digital infrastructure. By investing in Stream Data Centers, Apollo aims to capitalize on significant opportunities to scale operations and meet the surging demand for hyperscale data services.

The collaboration will also allow Stream to accelerate its operational capacity by injecting fresh capital into its existing land fund, facilitating the development of 650 MW of power capacity in metropolitan areas like Chicago, Atlanta, and Dallas. This growth tactic is essential to keep pace with the demands of hyperscale customers.

Information About the Investor

Apollo Global Management is a leading global alternative investment manager, with assets managed across various sectors including private equity, credit, and real estate. Since 2022, funds managed by Apollo have allocated approximately $38 billion into next-generation infrastructure, which emphasizes renewable energy sources, digital platforms, and computing power.

With a well-established track record, Apollo is known for its strategic approach to investment, aiming to build scalable and sustainable businesses. The firm intends to enhance its investment strategy further by leveraging Stream Data Centers as a core operating platform.

View of Dealert

This strategic acquisition by Apollo of a majority stake in Stream Data Centers is a promising investment opportunity. As the demand for cloud services and artificial intelligence applications continues to surge, Stream's established presence in key U.S. markets uniquely positions it to meet this growing demand.

The substantial injection of capital into Stream's development projects underscores the commitment to scaling operations effectively. Coupled with Stream’s proven track record and growth potential, this venture is expected to yield significant returns for Apollo and its investors.

Moreover, the emphasis on maintaining long-term customer relationships combined with an ongoing focus on sustainable practices places Stream on a solid growth trajectory. This alignment with market trends enhances the investment's viability.

Overall, this deal between Apollo and Stream is strategically sound and aligns with the advancing needs of the digital infrastructure sector, making it an exemplary investment at a pivotal moment in the industry.

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