Brookfield Asset Management seeks partner for Ascenty amid Brazil data centre boom, sources say

Global investment firm Brookfield Asset Management BAM-T is seeking an investment bank to advise it on the potential sale of a minority stake in Ascenty, one of Latin America’s largest data centre operators, according to two sources familiar with the matter.

Brookfield, in partnership with Digital Realty, controls Ascenty and wants a minority partner to fund its expansion, primarily in Brazil. The Canadian investor is eyeing local banks it has worked with previously for the advisory role, including Itaú BBA and Bradesco BBI, the sources said.

Ascenty’s expansion plans align with Brazil’s emergence as a global hub for data centres. As demand booms for cloud computing and artificial intelligence, investors are expected to pour over $10-billion into the sector in Brazil over the next decade, according to estimates from Banco Santander and Brazil’s Mines and Energy Ministry.

With fewer than 200 facilities, the country already ranks among the top 15 global markets. A Santander report projected annual revenue rising 7.1 per cent from 2024 to 2028, exceeding the global average of 6.6 per cent over the same period.

Brookfield initiated talks with the banks in 2024, aiming to finalize the hiring process early this year and complete the sale by the end of 2025.

Founded in 2010 by American businessman Chris Torto and investment firm Great Hill Partners, Ascenty owns 34 data centres, either operational or under construction, in Brazil, Mexico, Chile and Colombia. These centres are interconnected by a dedicated 5,000-kilometer (3,106.9-mile) fiber-optic network.

The asset management firm has not priced the stake for sale, and valuing Ascenty is challenging as it is not publicly traded. Since Brookfield and Digital Realty acquired Ascenty for $1.8-billion in 2018, its number of data centres in operation and under construction has more than doubled in Latin America.

“In Brazil, there is available land and good connectivity with the entire globe,” Marcos Siqueira, chief operating officer and sales head at Ascenty said in an interview. He declined to comment on the deal talks.

Brookfield and the banks also declined to comment, and Digital Realty did not respond. The two firms each own 49 per cent of Ascenty, while Chief Executive Officer Chris Torto holds the remaining 2 per cent.

Other companies active in the sector include Tecto Data Centers, a unit of digital infrastructure provider V.tal, controlled by investment bank BTG Pactual; cybersecurity firm Grupo FS; global digital infrastructure firm Equinix and ODATA, acquired by Aligned Data Centers in 2023; and Elea Data Centers.

With 181 data centres, Brazil accounts for less than 2 per cent of the global market dominated by the U.S. and Europe, Maria Paula Cantusio, head of ESG analyzes at Santander Brazil, said in an interview.

However, the U.S., Europe and India, another competitor, are grappling with energy constraints, she said.

Meanwhile, Brazil has been expanding its renewable energy capacity and investing in transmission lines, creating incentives for increased company investments.

Data centre companies require substantial upfront investments, and while climate can influence location decisions, factors such as proximity to consumers, power availability, network connections, and international relations also play a significant role.

For the energy sector, data centres equally offer new business opportunities and challenges in the planning of transmission and distribution networks.

Several projections are based on forecasts from Brazil’s state-owned Energy Research Company (EPE), which predicts load from data centres will increase to 2.5 gigawatts (GW) by 2037. That is more than triple the current load of 671 MW from operational installations, according to private consultancy JLL.

However, the growth potential is significantly higher. Official projections suggest that the demand for connecting new or expanding data centres to Brazil’s electrical grid could reach up to 9 GW by 2035. If this full demand is realized, it would add a load nearly equivalent to the entire Northeast region of Brazil.

The main challenge is estimating actual demand to avoid cost overruns and idle capacity.

“If there is expansion without load, the transmission usage tariff will increase without a corresponding increase in capacity contracting, distributing costs to other users. Conversely, if we are overly conservative, there will be a lack of space, which will inhibit investments from this new segment in the country,” said Thiago Prado, president of EPE.