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US private capital giant KKR is targeting a 10x return on a potential multibillion-dollar sale of a decades-old company that provides cooling equipment for data centres, as the AI ​​boom boosts valuations.
According to people familiar with the matter, KKR is working with advisers on the sale of CoolIT Systems, a company that traces its origins to 2001 and employs its technology in everything from making liquid cooling systems for gaming computers to supporting AI infrastructure.
The New York-based private capital group was expecting CoolIT to fetch a valuation of more than $3 billion, a huge jump from the $270 million valuation it had when KKR bought a majority stake in 2023, the people said. Abu Dhabi’s sovereign investor Mubadala holds a minority stake.
The massive buildout of data center infrastructure to support the growth of hyperscalers and the rollout of AI has fueled growth in dealmaking beyond the technology sector. There has been significant growth in energy and industrial deals involving AI infrastructure suppliers.
The potential sale of CoolIT was in its early stages and there was no guarantee it would result in a transaction, the people said. He said several strategic buyers have been identified as potential bidders.
KKR and Mubadala declined to comment. CoolIT did not immediately respond to requests for comment.
According to the American Edge Project, a technology advocacy group, approximately 3,000 data centers are under construction or planned in the US, adding to 4,000 existing sites, increasing potential demand for CoolIT’s services. However, investors have begun to worry about the potential returns on investment from the huge amounts of cash pumped into building data centers by hyperscalers and infrastructure funds.
Last year, industrial manufacturer Eaton paid $9.5 billion to buy Boyd Corporation’s thermal business to boost its services for data centers, which was expected to generate about $1.7 billion in sales this year, most of which is from liquid cooling services. Competitor Vertiv also bought thermal management company Purgerite last year for about $1 billion.
Earlier this week, private equity investors Global Infrastructure Partners, which is owned by BlackRock, and EQT struck a $33 billion deal to take utility group AES Corporation private, adding a business that generates large amounts of renewable energy to meet huge power demand from data centers.
KKR has been one of the most aggressive private capital acquirers of data centers in recent years. It took US data center operator CyrusOne private with GIP in 2021 in a deal valued at about $15 billion, including debt.
