Spark Divests 75% Stake in Data Centre for $705 Million

Telecommunications company Spark has announced the sale of a 75 percent stake in its data centre operations for $705 million. This strategic move is designed to secure necessary funding to address the increasing demand for data storage and computing services. Jolie Hodson, Spark’s chief executive, expressed optimism about the deal, stating that this partnership will enable the company to realize value from its data centre assets while retaining a 25 percent stake to continue benefiting from the growing market.

Upon completion of the sale, Spark anticipates receiving cash proceeds of approximately $486 million. Additionally, deferred cash proceeds of up to $98 million will depend on achieving specific performance-based objectives by the end of the 2027 calendar year. The funds generated from this transaction are earmarked for reducing Spark’s net debt.

Hodson elaborated on the future of the company, indicating that Spark plans to transition its data centre assets and operations into a new stand-alone entity, currently referred to as DC Co. This new company will operate with its own board, management team, and debt financing facilities. Hodson highlighted that DC Co boasts a robust data centre platform, with over 23 MW of built capacity across 11 facilities in New Zealand. The company also has plans for a significant greenfield development in Auckland’s North Shore and further expansions at the Takanini site in South Auckland.

Investment firm Pacific Equity Partners (PEP) will play a pivotal role in this venture. Managing directors Andrew Charlier and Evan Hattersley stated that their investment aligns with PEP’s growth strategy. They emphasized that with PEP’s backing and Spark’s partnership, DC Co is well-positioned for transformative growth. This growth is expected to support essential infrastructure for cloud adoption, artificial intelligence, and data sovereignty in New Zealand.

The transaction marks a significant step for Spark as it adapts to the evolving landscape of data services and investments. As the market for data centres continues to expand, this deal allows Spark to maintain a foothold while also enhancing its financial health.

In summary, Spark’s divestment of a 75 percent stake in its data centre business not only provides immediate liquidity but also positions the newly formed DC Co for future growth in a critical sector.