Synergy Research promised that 2020 would be a ‘bumper year’ for data centre deals back in April – and so it has proven, with total expenditure having broken $30 billion.

The analyst firm’s latest note said that, with a month still to go, data centre M&A has already beaten the 2017 record, as well as matching 2019’s record for volume of deals.

John Dinsdale, a chief analyst at Synergy Research, said the reason for the surge came down to four straightforward trends converging. “Burgeoning cloud usage requires ever-increasing data centre capacity; data centre providers need to keep on building and operating more data centres; more investment capital is needed to fund the bailouts; and positive long-term trends are attracting new investors,” said Dinsdale.

The $8.4 billion acquisition of Interxion by Digital Realty, back in October 2019, primarily helped boost the 2020 coffers. Yet the past 12 months has also seen five more billion dollar-plus deals, as well as a $2bn secondary share listing.

Digital Realty’s acqusition of Interxion is seen as one of the two biggest deals brokered since 2015, the other being its buy of DuPont Fabros, the acqusition of Verizon data centres and Telecity by Equinix, and Global Switch by Chinese investors.

In April, Synergy found that 2020 deals had already surpassed their 2019 equivalent. As the world was getting to grips with the first lockdowns imposed by Covid-19, consensus held that cloud services were inevitably going to see an uptick – and so it has proved. Yet Dinsdale noted Covid had ‘inevitably slowed down some transaction and due diligence activities.’

The pipeline for 2021 remains strong, with Synergy adding it is aware of almost $7bn in deals and IPOs that are in various stages of closing.

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