Borealis Data Center Secures $148m to Expand Nordic Operations
Borealis Data Center (BDC), a Nordic digital infrastructure operator secured a $148 million financing package to fund its expansion in Iceland and Finland.
The Nordic data center market has been growing rapidly, with major players such as Equinix, DigiPlex, and Green Mountain expanding their presence in the region. These operators are drawn by the availability of low-cost renewable energy, strict data privacy regulations, and a cool climate that reduces cooling costs.
BDC's latest financing positions it competitively within this landscape, enabling it to scale operations and cater to the increasing demand for sustainable and high-performance computing solutions. The financing includes a $135 million term loan from Infranity, a Paris-based infrastructure investment firm, and a $13 million revolving credit facility from Iceland’s Arion Bank. Pareto Securities acted as the financial advisor on the transaction.
The investment underscores the growing institutional interest in digital infrastructure assets, particularly in the Nordics, where access to renewable energy and favorable climate conditions offer cost efficiencies and sustainability advantages for data center operators.
According to a recent CBRE report, institutional investment in European data centers reached €8.7 billion in 2023, a 40% increase from the previous year, highlighting strong demand for scalable, energy-efficient digital infrastructure. The capital will be used to expand BDC’s existing facilities in Iceland and Kajaani, Finland, catering to the increasing demand for high-performance computing (HPC) and artificial intelligence (AI) workloads.
Institutional Backing and Growth Strategy
BDC, founded in 2014, operates three data center campuses in Iceland and one in Finland. The company is majority-owned by Vauban Infrastructure Partners, which holds a 92.2% stake through its Core Infrastructure Fund III. The firm acquired its position in July 2021 as part of a broader strategy to develop long-term, sustainable digital infrastructure investments.
Björn Brynjúlfsson, CEO of BDC, emphasized the importance of the financing to the company’s growth trajectory. “As demand for high-performance computing and AI applications grows, we are ensuring that our facilities remain at the forefront of technological advancements while maintaining a sustainable operational footprint,” he said.
The new financing package will allow BDC to scale up its operations in anticipation of increasing demand from enterprise and cloud computing clients seeking energy-efficient solutions. The company’s sites run on 100% renewable energy, a key selling point in an industry facing scrutiny over its environmental impact.
Investor Perspective: Infranity and Arion Bank
For Infranity, the deal aligns with its focus on core infrastructure investments with stable, long-term returns. Georgios Tzimas, Investment Director at Infranity, noted, “This transaction reinforces our commitment to financing essential digital infrastructure. Data centers are critical enablers of the digital economy, and Borealis’ commitment to sustainability makes this an attractive investment.”
Arion Bank, which has been a long-term financial partner to BDC, highlighted the strategic importance of data centers in the region. Hákon Hrafn Gröndal, Managing Director of Corporate & Investment Banking at Arion Bank, stated, “We see significant opportunities in the data center market, both in Iceland and internationally. Borealis is making major strides in expanding its capacity, and we are pleased to support its ambitions.”
Nordic Data Center Market: A Strategic Advantage
The Nordics have emerged as a preferred location for data center investments due to the availability of low-cost renewable energy and natural cooling advantages, which contribute to energy efficiency. Iceland, in particular, offers abundant hydropower and geothermal resources, making it an attractive destination for energy-intensive computing workloads.
As AI and cloud computing drive demand for high-performance data infrastructure, investors are increasingly targeting data centers that can offer scalability while mitigating environmental impact. Regulatory policies in the EU and Nordic region are also shaping this evolution, with stricter energy efficiency standards and sustainability reporting requirements pushing operators to adopt greener practices. The EU’s Climate Neutral Data Centre Pact, for example, sets ambitious targets for energy efficiency and carbon neutrality, influencing investment decisions and operational strategies in the sector. The BDC financing follows a broader trend of institutional capital flowing into the digital infrastructure space, with investors seeking stable cash flows and inflation-protected returns.
Vauban Infrastructure Partners, which manages over €9.2 billion in assets, has positioned itself as a key player in this transition. Sam Léa Zhang, Investment Director at Vauban and Chair of BDC’s Board, commented, “This financing validates the strong partnership between Vauban and Borealis and underscores the effectiveness of the company’s growth strategy.”
As competition intensifies in the European data center market, Borealis Data Center is positioning itself as a leading player in sustainable high-performance computing, leveraging its Nordic footprint and institutional backing to scale its operations. However, the company faces potential challenges, including supply chain constraints for critical infrastructure components and evolving regulatory requirements across the EU. With stricter sustainability mandates and increasing energy demands from AI-driven applications, BDC will need to navigate these complexities to maintain its competitive edge and growth trajectory.
Sources:
https://www.cbre.com/insights/reports/global-data-center-trends-2024
https://www.climateneutraldatacentre.net/
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