The development is significant since typically buyout funds focus on physically infrastructure. In contrast Digital Colony’s fund illustrates how investors are now seeking assets that support the digital economy.
According to sources familiar with the matter at hand, private equity firm Digital Colony, which has the backing of U.S. real estate investor Thomas Barrack, has raised $4.05 billion in a funding round as it seeks to raise capital to invest in emerging technologies such as 5G wireless networks and the Internet of Things (IoT).
Incidentally, buyout funds which focus on infrastructure investments typically invest in physical assets such as bridges, airports, and toll roads. Digital Colony’s fund illustrates how investors are now seeking assets that support the digital economy driven by big data and artificial intelligence.
Globally, mobile operators are likely to invest around $480 billion between 2018 and 2020 to upgrade their networks, according GSMA, a mobile communications industry body. This underscores the potential size of the investment opportunity.
Digital Colony had set a fundraising target of $3 billion and has completed the fundraising at the maximum it could raise, said sources on the condition of anonymity since the details are private.
Digital Colony’s spokeswoman declined comment.
Digital Colony was set up in 2018 by Digital Bridge Holdings, which invests in communications infrastructure companies and is led by Marc Ganzi and Ben Jenkins, and Colony Capital; Barack serves as the company’s CEO and executive chairman.
According to a source familiar with the fund’s operations, Colony Capital fills two of the five members of the fund’s investment committee, while Digital Bridge is responsible for Digital Colony’s day-to-day investment activities. Colony Capital supports the fund in regulatory, accounting and investor relations matters.
Digital Colony has already committed around half its capital in five deals in North America and Europe, said sources. Its largest deal so far was the roughly $8.2 billion acquisition of U.S. communications infrastructure provider Zayo Group in partnership with private equity firm EQT Partners.