Spark Offloads 75% Stake in Data Centre Business

New Zealand’s telecom company Spark New Zealand (Spark) on Tuesday announced that it has entered into an agreement to sell a 75% interest in its data centre business to Pacific Equity Partners (PEP).

The investment will be made from PEP’s Secure Asset Fund, which invests in infrastructure growth platforms, Spark said in a regulatory disclosure with Australian Securities Exchange (ASX) this morning.

The transaction values the business at up to $705 million representing a FY25 pro-forma EBITDA multiple of 30.8×2. As cloud and AI uptake continues to increase demand for data storage and compute in New Zealand, the introduction of a capital partner secures a funding pathway to build out Spark’s planned 130MW+ data centre capacity development pipeline. 

Spark CEO Jolie Hodson said that they were pleased to reach this agreement with PEP, one of Australia’s leading private capital managers with a strong track record of growing businesses across New Zealand and Australia.
“Through this partnership we will realise value for our data centre assets in the short term, while also continuing to participate in the growing market through our 25% retained stake – creating further value for our shareholders over the long term,” Jolie said.

Spark expects to receive cash proceeds of approximately $486 million at completion, with additional deferred cash proceeds of up to approximately $98 million contingent on the achievement of certain performance-based objectives by the end of the 2027 calendar year. Proceeds will be used to reduce group net debt.

As part of the transaction, Spark will move its data centre assets and operations into a new stand-alone company that is currently being referred to as ‘DC Co’, which will have its own Board, management team and debt financing facilities (non-recourse to Spark).

DC Co’s Plans           

Jolie also said that DC Co has a leading data centre platform in a growing market, with over 23MW of built capacity at 11 operating data centre facilities across New Zealand, and advanced plans in place for a greenfield development on Auckland’s North Shore, as well as further extensions at the Takanini site in South Auckland.

“This strategic investment allows DC Co to leverage its strong market position as a high-quality data centre network provider, to capture a significant share of the expected growth in the local data centre market and position itself as a competitive option for international customers looking to grow their services in New Zealand,” Jolie added.

PEP Managing Directors Andrew Charlier and Evan Hattersley said that PEP’s investment with Spark in its data centre business, aligns well with their Secure Assets strategy of partnering to invest in high quality infrastructure growth platforms.

“With PEP’s backing and Spark’s partnership, DC Co is positioned for transformative growth, delivering essential infrastructure that will support cloud and AI adoption and data sovereignty in New Zealand,” they added.

The transaction is subject to regulatory and customary consents including Overseas Investment Office approval, with a targeted completion date of 31 December 2025. Jarden has been appointed as financial advisor to Spark on the transaction.