Goldman Sachs’s Alternatives arm is buying Canadian data centre developer QScale in tandem with its founders as the partners press ahead with an ambitious expansion plan potentially worth billions.
The bank’s specialized investment platform, which holds more than US$625-billion in assets ranging from private equity to infrastructure, is taking a majority stake in QScale, according to information made public Wednesday.
QScale co-founder and president Martin Bouchard will also reinvest in the business, together with other senior executives and founders. The company will keep its current management and Lévis, Que., headquarters, a news release said.
No financial information was disclosed.
“This alliance gives us the means to significantly accelerate our growth,” Mr. Bouchard said in an e-mailed statement. “At a time when global demand for AI data centers is growing at an unprecedented pace, partnering with a world-class organization that shares our vision and our commitment to building sustainable, high-performance, future-ready digital infrastructure marks a defining milestone in our history.”
Demand for data centres designed for artificial intelligence and other advanced computing needs is surging worldwide as adoption of AI technology grows, and provinces are moving to attract them to benefit their economies.
It’s at least the second Canadian data centre-related acquisition by a U.S. company this year, after Ecolab Inc. of St. Paul, Minn., bought Calgary’s CoolIT Systems Inc. in March.
CoolIT sold to Ecolab for $4.75-billion in one of biggest Canadian tech takeovers
QScale’s main data centre campus is in Lévis and the company says it will now move forward with construction of a new building on the site, representing an additional investment of $700-million. Customers include Hewlett Packard Enterprise Co., which used the data centre to launch its AI cloud.
The Quebec company is also aiming to launch a new data centre facility in Ontario with a capacity several times that of its Lévis site. Investments for that project are currently estimated to top $4-billion but final plans haven’t been made public.
After early backing from the Quebec government and Desjardins Capital in 2021, QScale hired Bank of Nova Scotia and TD Securities to scout for much bigger investment dollars over the past year and cemented a deal with Goldman Sachs. There was surprisingly “little interest” from Canadian investors, Mr. Bouchard told Montreal’s La Presse newspaper.
Data centres require immense amounts of power, and Quebec’s abundant and relatively cheap hydroelectricity has been in high demand from the industry for years. Until recently, however, the province, which controls power giant Hydro-Québec, largely rejected data centre development because the sector wasn’t seen as a major job creator.
Now, the Coalition Avenir Québec government has had a change of heart. It sees the industry as an opportunity. Major players such as Google are hungry for electric power and willing to pay well for it while manufacturers are increasingly locating their operations near data centres, former premier François Legault has said.
Still, access will come at a price. In February, Hydro-Québec asked the province’s energy board to hike rates for new data centres to 13 cents a kilowatt hour, roughly double the price it typically charges to customers that consume large amounts of power.
Several major data centre operators have facilities in Quebec, including Vantage, Cologix and OVHcloud. Most are concentrated in the Quebec City and Montreal urban areas.
New York-based Pipedrive, a company that develops software solutions for customer relationship management, announced Wednesday that it has launched a new data centre in Montreal. The new facility will improve responsiveness for Canadian clients and remove reliance on cross-border data routing, the company said.
With a report from The Canadian Press
Editor’s note: A previous version of this story stated that Goldman Sachs's Alternatives arm holds more than US$625-million in assets. The correct figure is US$625-billion.