As an honoree in the new Datacloud Power 50 list, what has inspired you recently in your role at Kirkland & Ellis?
The holistic approach we offer clients in the digital infrastructure space is what’s so inspiring about being part of Kirkland & Ellis. This is needed amid the proliferation in scale of data centre projects driven largely by AI, making every aspect of their development more complex. As a result, a law firm must be able to offer the highest level of support throughout the project lifecycle.
Kirkland distinguishes itself through having industry-leading attorneys that handle every aspect of this lifecycle, in areas from data centre-related M&A deals to equity investments, real-estate acquisitions, project financing, construction agreements and customer contracts.
This is combined with Kirkland’s expertise in energy and infrastructure, including on power supply agreements, sustainability and data security.
How do you bring your past experience in M&A and transactions to bear in your current role?
I’ve been practising in the digital infrastructure space for 30 years. I’d like to think that I therefore have a unique historical perspective on how the market has evolved, helping to inform every aspect of a project – particularly on how to approach corporate structuring and financing.
At Kirkland, we believe that deep industry experience is essential to representing clients at the highest level, aiding insight into every aspect of a data centre development project.
What do you see as the key challenges in today’s global data centre market and how can they be overcome?
With the proliferation of bandwidth-intensive applications including AI, 5G, big data analytics and IoT, we’re now seeing gigawatt-scale campuses being constructed, involving billions of dollars of investment. These projects are being undertaken against the backdrop of significant macroeconomic challenges, most notably in relation to power availability and supply chain disruptions.
Many solutions are being explored and advanced to tackle the power challenge, including expansion of grid infrastructure, meter-based options and alternative power sources from wind to solar and nuclear energy. On the supply-chain side, providers are looking to approaches like joint ventures and strategic alliances to aid efficiency.
Kirkland is well-positioned to help clients tackle these challenges through creative solutions across the project lifecycle and ecosystem, assisting them in rolling out technology and energy infrastructure. The firm also seeks to ensure that the structuring of all contractual relationships maximises a client’s chances of readily raising financing on reasonable terms.
What do these trends mean for transactions in the industry?
Given the massive scale of modern-day data centres, projects have become more protracted and can sometimes last as much as four or five years.
With many milestones during the project lifecycle, it’s critical that every step of it dovetails with every other. This is challenging, as the agreements needed in connection with real-estate acquisition, equity and debt financing, power supply and customers do not occur concurrently, but at varying stages.
Having support from a firm such as Kirkland is essential to a project’s success, providing the foresight to ensure it is structured correctly up front. This aids ready raising of financing, consistency across contracts and speed of delivery.
How do you see the long-term outlook for data centre players in securing funding for transactions given the market’s rapid expansion in the age of AI?
There is significant need for capital, given that the 1GW campuses being planned by some will likely require investment of US$10 billion. An operator may also be considering undertaking five to 10 projects in the coming years, thus requiring spend of maybe US$100 billion.
To accommodate this, we’re looking to creative financing models such as asset-backed and commercial-mortgage-backed securities. Kirkland is at the forefront here, having led many avant-garde project and structured financing transactions in the sector.
We’re also seeing many strategic alliances between data centre operators and other parties, including power suppliers and tenants. Looking at the next five years, data centre demand is still dramatically outpacing supply, which is likely to lead to an acceleration of such relationships.
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