I Squared Capital Bets Big on AI Infrastructure

I Squared Capital has acquired ten data center facilities from Cogent Fiber for $225 million in cash, signaling a major commitment to artificial intelligence infrastructure. This transaction forms the basis of a new U.S. data center operating platform for I Squared, which intends to invest an additional $1 billion into upgrades, expansions, and further acquisitions.

The deal, encompassing nine locations, reflects a broader industry shift. It moves away from solely relying on large, centralized data centers for AI model training towards developing facilities closer to end-users. These closer facilities are optimized for AI inference, the process of 'doing' or executing tasks based on learned models.

This strategic acquisition includes approximately 53 megawatts of power capacity and 259,000 square feet of colocation space across nine key U.S. markets. Notable locations include Chicago, Atlanta, and Houston. I Squared Capital emphasized that the acquired facilities offer critical advantages in location, power, and connectivity within markets experiencing limited new supply, factors crucial for long-term data center value.

Cogent Fiber, an indirect subsidiary of Cogent Communications Holdings, was involved in the sale. The market has seen Cogent Communications Holdings' shares decline by nearly 16% in the year leading up to this transaction. I Squared Capital is a known investor in digital infrastructure, having recently agreed to acquire a majority stake in Elea, a prominent data center platform in Brazil.