Data center operators are fixated on the “five nines” — an expectation that they’ll keep the infrastructure be
hind financial markets, e-commerce and artificial intelligence running 99.999% of the time.
So as news rippled out last month that a CyrusOne facility in Aurora, Illinois, that handles trillions of dollars
in trading volume each day went down for 10 hours, industry insiders were stunned.
To them, it was an eternity, and the failure at the data center outside Chicago is a black eye for CyrusOne’s backers.
KKR & Co. and Global Infrastructure Partners, now a unit of BlackRock Inc., announced their acquisition of CyrusOne in 2021 for $15 billion. They secured b
illions more in financing for the firm as they deepened their foothold
in a booming industry increasingly dominated by the likes of Blackstone Inc. and Blue Owl Capital Inc.
Data centers, the physical embodiment of the AI revolution, are one
of the hottest bets in private markets. But as the debate rages over whether the boom is a bubble — debt levels and valu
ations are climbing — the challenges for Wall Street can be much more
tangible: from cooling the space to literally keeping the lights on.
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The CyrusOne data center in Aurora, Illinois.
KKR pursued the investment for years and was the driving for
ce behind the deal as it worked to rope in various bidding partners.
CyrusOne touches several of the private equity firm’s major u
nits. Last year, KKR led part of a $7.9 billion loan to the data center operator, co-arranged by its own capital mark
ets team and funded by its Global Atlantic insurance arm alongside some of its clients. And KKR owns its CyrusOne stake through its infrastructure and
real estate funds, as well as Strategic Holdings, a unit that holds long-term investments on the firm’s balance sheet.
All that cash wasn’t enough to stave off disaster at Aurora, an older property in CyrusOne’s portfolio of mor
e than 55 operational data centers. A series of missteps by facilities workers at a site running on older systems led to
a major outage for CME Group Inc. Such incidents typically re
quire the data center operator to compensate the client, according to people familiar with the industry.
CME entered a 15-year lease at the Aurora data center in 2016, according to a prior announcement.
“They will need to double down on becoming a resilient data center because this is a failure that happened and shouldn’t have,” said Andrej Danis, head of AlixPar
tners’ Americas telecommunications and digital infrastructure practice.
KKR and GIP said they’re confident in CyrusOne’s strategy and that it’s poised to benefit from growing demand.
“Under our ownership, CyrusOne has accelerated its expansion, enha
nced its competitive position while deepening its commitment to innovation, and reinforced its standing as a pre
mier developer and operator of mission-critical data centers,” Wald
emar Szlezak, KKR’s global head of digital infrastructure and a CyrusOne board member, said in an emailed statement.
Will Brilliant, GIP’s global head of digital infrastructure and
a CyrusOne board member, echoed Szlezak’s remarks in a separate statement.
“We fully support CyrusOne, as we have done throughout our ownership, to invest significant resources to maintain a leading position as a provider of critical
data center development and operations services for its customers,” Brilliant said.