*

Brookfield seeks minority partner for Ascenty's expansion

in

Brazil

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Brazil's data center market projected to grow over $10

billion

in a decade

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Energy constraints in US, Europe boost Brazil's data

center

appeal

By Luciana Magalhaes and Letícia Fucuchima

SAO PAULO, Jan 8 (Reuters) - Global investment firm

Brookfield Asset Management ( BAM ) 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 center operators,

according to two sources familiar with the matter.

Brookfield, in partnership with Digital Realty ( DLR ),

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 centers. 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% from 2024 to 2028,

exceeding the global average of 6.6% 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

centers, either operational or under construction, in Brazil,

Mexico, Chile and Colombia. These centers 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 ( DLR ) acquired Ascenty for $1.8

billion in 2018, its number of data centers 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 ( DLR ) did not respond. The two firms each own 49% of

Ascenty, while Chief Executive Officer Chris Torto holds the

remaining 2%.

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 ( EQIX ) and ODATA, acquired by Aligned Data Centers in

2023; and Elea Data Centers.

MARKET SHARE

With 181 data centers, Brazil accounts for less than 2% of

the global market dominated by the U.S. and Europe, Maria Paula

Cantusio, head of ESG analyses 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 center 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 centers 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 centers 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 centers 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.