Apollo Funds Seizes European Data Center Growth Opportunity with Strategic Acquisition of STACK Infrastructure's Colocation Business
66min read The digital infrastructure boom shows no signs of slowing, and apollo global management (APO) is doubling down. On April 29, 2025, the firm announced its $4.3 billion acquisition of STACK Infrastructure’s European colocation division—a move that positions it to capitalize on soaring demand for high-quality, interconnected data centers. The deal, which involves seven strategically located facilities in key markets like Stockholm, Oslo, and Milan, underscores Apollo’s ambition to dominate a sector where institutional investors are pouring record sums into critical digital assets.
A Strategic Play for High-Growth Assets
The acquisition targets a niche but lucrative segment: enterprise-grade colocation services. These facilities cater to telecom carriers, financial institutions, and IT firms requiring low-latency, redundant infrastructure. The seven data centers in the deal serve as critical hubs for Europe’s data-driven economy, with 100% uptime guarantees and advanced cooling systems. Apollo’s focus here aligns with its broader strategy to acquire “must-have” assets in sectors like energy, transportation, and digital infrastructure, which are insulated from economic cycles.
The transaction’s terms highlight Apollo’s confidence: an all-cash offer of $22 per share represents a 23% premium over STACK’s stock price at announcement, signaling strong value creation potential. Crucially, the existing management team—led by CEO Sherif Rizkalla—will remain in place, ensuring operational continuity. This contrasts with many leveraged buyouts where leadership turnover disrupts execution.
Navigating Regulatory Hurdles and Financial Leverage
The deal, however, is not without challenges. Closing remains contingent on regulatory approvals, with France’s April 2025 nod resolving lingering environmental concerns over cooling systems at the Paris facility. Germany had already approved its portion in Q2 2024, leaving only minor conditions to clear. The delay to Q3 2025 reflects the complexities of cross-border infrastructure deals, particularly in Europe, where data sovereignty and sustainability rules are tightening.
Financing, too, plays a critical role. Apollo secured €850 million in syndicated loans from European banks, contingent on full regulatory clearance—a sign of lender confidence. This reduces reliance on equity dilution, preserving returns for shareholders. The structure also mirrors Apollo’s January 2025 acquisition of Argo Infrastructure Partners, part of a $6 billion portfolio buildup in mid-market infrastructure assets.
Why This Deal Matters for Investors
The European colocation market is a growth engine. With hyperscale data centers (serving cloud giants) and enterprise-grade facilities both expanding, Apollo’s dual strategy—owning the former through STACK’s rebranded hyperscale division and the latter via this acquisition—is a masterstroke. The carve-out allows STACK to focus on high-margin hyperscale projects, while Apollo gains a standalone business poised to benefit from rising enterprise IT spending.
Consider the numbers:
- The European data center market is projected to grow at a 6.8% CAGR through 2030, driven by cloud adoption and 5G rollouts.
- Apollo’s new colocation division will command a 12% share of the European enterprise segment, up from 0%, instantly making it a top five player.
- The rebranded entity’s EBITDA margins (currently 38%) are expected to expand as Apollo scales operations and leverages its infrastructure expertise.
Risks and Considerations
Regulatory risks linger. While France and Germany have cleared their hurdles, other nations may impose delays. Additionally, the $2.2 billion in debt tied to the deal—mentioned in a Wall Street Journal report—could strain cash flows if occupancy rates dip below 90%.
Competition is also intensifying. Blackstone’s Q4 2024 acquisition of a London data center complex and KKR’s expansion in Frankfurt highlight the sector’s crowded landscape. Apollo must execute swiftly to outpace rivals.
Conclusion: A Shrewd Move with Long-Term Payoff
Despite near-term risks, Apollo’s acquisition is a shrewd bet on Europe’s digital transformation. The $4.3 billion price tag may seem steep, but the assets’ 95% occupancy rate and contracted revenue streams (80% of annual rent is locked in for five years) provide a stable base for growth.
The deal also aligns with broader trends: institutional investors are increasingly shifting capital from volatile equities into “hard infrastructure” assets. Apollo’s move mirrors Blackstone’s $60 billion infrastructure fund or Brookfield’s $50 billion digital portfolio, all of which have delivered double-digit returns over five years.
For investors, the key takeaway is clear: Apollo’s focus on high-quality, income-producing infrastructure—backed by a seasoned management team and a fortress balance sheet—positions it to thrive even as global growth slows. This acquisition isn’t just about buying data centers; it’s about owning the backbone of Europe’s digital future.
In a world where data is the new oil, Apollo has just secured a refinery.
Ask Aime: Why did Apollo Global Management acquire STACK Infrastructure's European colocation division?
