All right, hopefully I'm mic'd up. Can you guys all hear me well? All right, touchdown. So, hello today. I wanna welcome everyone to the 2024 DigitalBridge Investor Day. I'm Severin White, the head of public investor relations for the firm. I wanna start by thanking everyone for joining us either here in person or online. You know, I'm pleased to see a lot of faces that I recognize today, as well as some new faces, for people that are just getting to learn and know more about DigitalBridge. The last time that we got together and profiled our business in 2021, we were just in the early stages of a very significant business transformation, and at the same time, going through a global pandemic. So everything was virtual, so it's great to be kind of in person here together, at the conclusion, frankly, of that multi-year transformation.
We've emerged in the last two months, after we deconsolidated the last piece of our operating segment as a pure-play alternative asset manager levered to powerful themes and digital infrastructure. We believe there's a very simple, compelling investment case around being an owner of DigitalBridge that Marc and the team are gonna lay out today. It's rooted in exposure to powerful secular tailwinds like cloud, mobility, and AI, driving investment in an increasingly digital economy. Number two, the relevance and differentiation that comes from being a specialist with deep expertise and a long track record of execution in the sector. And number three, a simple, high-growth business model built around durable, persistent earning streams, as well as participation in the value creation that we drive across our portfolio. Today we've got a few objectives.
For TMT REIT investors who already know the important role DigitalBridge plays in the digital infrastructure ecosystem, we wanna familiarize you with private markets, the fundraising environment today, and the capital formation strategy that we're employing to continue to grow our business. For folks that typically invest in alternative asset management space, we wanna give you some insight not only into the drivers of digital infrastructure but into DigitalBridge's highly differentiated platform and why that matters today as a new wave of construction kicks off to build the infrastructure for AI. Finally, we'll walk everyone through the financial implications of the growth that we're seeing across the ecosystem and how, at the corporate level, we continue to scale DigitalBridge. Let's get started.
We've got an agenda that should take about three hours, split roughly between the executive presentations that outline key aspects of the business and our four very interesting panels led by DigitalBridge executives and operating partners. This is where we'll take a deeper dive into topics like fundraising, the DigitalBridge difference, and how we're executing on the AI data center investment opportunity. Here you'll get to meet the broader DigitalBridge team and get a sense for the breadth and depth of the expertise that we bring to our sector. After closing remarks, we'll do a quick Q&A with questions we pulled from investors, and then you'll get a chance to meet the team directly at a cocktail hour after we conclude. Let's kick it off with an introduction to DigitalBridge led by our CEO, Marc Ganzi. Marc.
Thank you, Severin, and thank you all for coming out today. It really means a lot to us that those of you that took the afternoon to come spend some time with us. I'm gonna give you an introduction to DigitalBridge, but I wanna thank all of our global partners who showed up from as far as Singapore, London, and certainly LA, New York, and Boca to be here today. As Severin said, what you're gonna see today is the depth and the breadth of our team, and the operational expertise that we bring to bear in our investments and our assets that we think is highly differentiated.
If you walk away with one thing today, which is we do have the deepest and most experienced team on the street as it relates to digital infrastructure, and we're hopeful that you'll enjoy getting to meet some of these folks and get a deeper dive into what we do. So who are we today? As Severin said, through our transition today, we stand in front of you as a clean sheet global alternative asset manager focused on digital infrastructure and the surrounding ecosystem that comes with that. Just a quick walk through the numbers. Most of you have seen these numbers before: $80 billion of assets under management today, $33 billion of fee-earning assets under management. We have over 100 digital infrastructure professionals, actually about 320 around the globe today, operating and building and running these businesses, and 25+ years of experience.
Most of our partners, some of whom you'll hear from today, got their start in the '90s building the original infrastructure, moving from analog to digital. As we walk down that journey today, it's been a great journey, but there's a much bigger frontier in front of us. As I said before, we operate on a global basis. These are some of the logos and the companies that we run, own, and operate today, many of which you have seen and have interacted with in the past. As you can see, our ecosystem touches the entire global digital infrastructure ecosystem. What is digital infrastructure? Well, as I look around the room today, I do see a lot of familiar faces. Ric Prentiss, thank you for coming. The godfather of digital infrastructure himself is here, so thank you, Ric, for making it. It's data centers.
It's mobile infrastructure in the form of cell towers. It's fiber optic cabling, whether it's residential, long haul, sub-oceanic, small cells, and most importantly, edge compute, which is a new form of infrastructure that we've been investing in for the last decade. This is the ecosystem. This is what fuels the digital economy today. And why? Why do you wanna be invested to digital infrastructure today? For me, this is one of the most important thematics on the planet today, and it's really the ability to own DigitalBridge shares gives you the ability to have exposure to the pick-and-shovel of powerful secular themes like cloud and AI and mobility. Make no mistake, what we do is mission-critical.
We show up every day for customers around the world, and when we say show up for them, it's entitling, it's building, it's operating, and making sure we do so with reliability, something we've been doing for 30 years. Look, mobile is critical. We're gonna talk a lot about AI today. We'll talk about cloud, but ultimately, all of these applications are delivered in a mobile environment. So don't sleep on mobile infrastructure. It's an important part of the ecosystem. At the end of the day, the number one reason why our global LPs invest with us is because this is a resilient asset class. It's defensible, and most importantly, it's uncorrelated. This is why investors have been investing in digital infrastructure for the last 20, 30 years. Just a quick recap of the journey that we've been on.
When I became CEO of the public company when we made our merger back in 2019, I took the chair four years ago, and I stood in front of many of you, and I said, "Look, this is pretty simple. We're gonna give you a series of promises, and we're gonna go out, and we're gonna deliver them." And so what did we do? We said, "We're gonna go from a diversified real estate investment trust owning a disparate set of assets to digital infrastructure. We're gonna simplify our structure. We're gonna delever, and we're gonna become a pure-play asset manager focused on alts." What we think today will lay out for you a case, the best part of the ecosystem in the alt world today. As I said before, first, what we had to do, we had to take care of selling some real estate.
We did that. We did it in a very difficult environment. In the backdrop of the pandemic, we sold $33 billion of our legacy portfolio, which was the backbone of the REIT. Second, we simplified. What did that mean? We had to de-REIT because our, our taxable REIT subsidiary had grown so much earnings that ultimately, the imbalance between the TRS and the REIT assets were quite clear. And so we, we cleared the path, and we de-REITed. Along with that, we delevered. We inherited a balance sheet that almost at one point in time had $17 billion in debt. Today, we have $300 million of securitized debt. We've done a really good job being sensible with our balance sheet.
And then the last piece of the puzzle, which we completed last year, we deconsolidated our operating assets, now paving the way for the presentation that you're gonna hear today, which is ultimately a pure-play alternative asset manager focused on the most powerful secular tailwinds in the world. So what does that mean to become a pure-play? It means that ultimately, at the end of the day, we believe the asset-light model in digital infrastructure is the way to go. And that's not to take away from some of the other digital REITs that we compete with on a day-to-day basis and have enormous respect for, those of you that have invested in American Tower, Digital Realty, Equinix, Crown Castle, great companies, great management teams, and have proven the durability of the digital infrastructure model. What we offer to you today is a differentiated approach.
The enormity of the opportunity, the size of the CapEx required to meet the global demands of our customers will not work in a traditional REIT structure. What it does work is it works in a pure-play alternative asset management structure where we can form capital quickly, we invest that capital, we create powerful platforms, and we ultimately create the right outcomes where we ultimately deliver value for you, our shareholders, but also for our LPs. We'll talk about that virtuous cycle of how we ultimately raise capital, we invest it, and we harvest it, and we scale our business. So the milestones I won't go too deeply into this, but as you can see, it's been quite a transformation.
In the middle of the pandemic, as we sold our real estate, we kept investing in the best assets, going from $29 billion of AUM to today, $80 billion of AUM. We'll lay out for a path through today where we're going in the next five years, which we think is very compelling. A strategic transformation is in flight. Now what we're doing is we're very focused on the ways to invest and the ways to invest in digital infrastructure. It's not only about being an asset-light model where we can raise capital and deploy it effectively with our customers, but there are other ways to invest capital in digital infrastructure. Today, you're gonna walk away with a clear understanding of how we invest that capital on behalf of our global institutional clients, which are our limited partners.
And so the alternative investment framework for us today is really simple. One, we're asset-light. We're operating at an incredible scale. You're gonna see some numbers today that are pretty compelling in terms of where we're investing capital, where we're putting it, which portfolio companies are doing it, what types of assets we're investing in. But again, we have become the partner of choice to institutional investors and the partner of choice to customers all around the world and trusted with owning and operating and building this mission-critical infrastructure. Second, ecosystem investing. You've heard us say that a lot in the last year. What is it? Ecosystem investing is being a full-stack digital infrastructure alternative asset manager, not only investing in digital infrastructure but the adjacencies that surround that.
We're gonna walk you through that product set and make it very clear for you how we see ecosystem investing evolving in a rapidly changing digital world. Then high growth. You're gonna see a lot of that today. The stuff that we're investing in is the place you wanna be. It's the place where you're already invested, whether it's cloud, AI, mobility, or even the power that ultimately fuels this digital infrastructure. The places we're putting capital to work are the places you wanna put capital to work, which makes it compelling. Scalability. This is important. Where have we come in the last three to four years? We were out of the top 10 in terms of digital infrastructure assets owned and under management. Today, we sit slightly behind American Tower and Equinix.
We have built a global portfolio focused not just myopically on towers or data centers but diversified, not only in geography but diversified in the sectors that we invest in and our approach. That's allowed us to scale, be a market leader, and most importantly, create a capital-efficient framework where you, our shareholders, win. So talk about our footprint today. We have six global data center platforms, 10 different investment vehicles. We have over 170 data centers today, 70+ markets. In fact, I think we're actually in 89 markets today, which is incredible, over 20 million sq ft of leasable space, and over 4.7 GW of power available today for our customers. That's an incredible portfolio of assets.
Most importantly, doing that on five continents across cloud, private cloud, public cloud, edge, and of course, AI, all of the key swim lanes you wanna be in in data centers today. Then in terms of towers, like I said before, we're not gonna sleep on towers. We still think towers are a great investment. We operate over 89,000 cell towers today on a global basis. We've been doing it for three decades. My partner, Alex Gellman, is in the room today. You'll hear from him. One of my original partners, Jeff Ginsberg, is here. We've been entrusted with mobile networks for multiple decades. This is not a new investment for us. We operate in 10 different countries. We have 8 different platforms globally. And what you'll hear from us today is that there's a bright future ahead for mobile infrastructure.
There's a lot that's gonna happen at these towers and on the edge. Then last but not least, obviously, we've been out investing and building these great companies and all of these assets. But what does it equate to you as an investor in DigitalBridge? It's quite simple. First, our AUM growth, 36% CAGR growth. We're out there building at scale. Buying and building is our core thesis to our strategy. You don't have to choose when you own DigitalBridge shares, whether we go and buy assets, whether we build assets, or we're out there doing the buy and build, which we'll talk about today. And then fee earning, fee-earning equity under management. This is an area where we've made a lot of progress. Again, 36% CAGR growth today at $32.5 billion and growing.
We'll lay out the financial case for you today in terms of where we're going in the next five years. Then the next stage is ultimately what we call multi-strat, the ability to work with our clients not only in our flagship product, which is digital infrastructure, but looking out into the ecosystem and those adjacencies. Many of you have heard me say this before. We occupy an incredibly important street corner, which is the intersection of infrastructure and digital. And when you occupy that street corner, it would be for us giving away a competitive advantage if we didn't do credit, if we didn't do core, late-stage venture growth, and all of the products that we have. We're gonna walk you through these products and why they are meaningful to us. But most importantly, also, why are they meaningful to our LPs?
As I mentioned on the last quarterly call, we now have our clients buying multiple products from us at the same time. This is a major shift in our strategy. But most importantly, it's a shift in how we form capital and how we go to work for clients. We're gonna talk a lot about that today with my partner, Kevin Smithen, who runs global capital formation. And then last but not least is having those right solutions. So the key to this is not letting a big global client or a big allocator walk out the door and say, "Well, I'm gonna give money and credit somewhere else," or, "I'm gonna go do late-stage venture growth somewhere else." No. That client stays here. We work with them.
We understand their objectives, their investment horizon, how much money they're gonna allocate, and ultimately tying those products efficiently to our core flagship fund and our adjacent co-investment vehicles. This is truly the DigitalBridge flywheel. This is where our business is going. This is why we have strong conviction in our ability to scale, form capital, invest, and create the right outcomes for you. So at the end of the day, this is where we are. This is what we call the flywheel. It's fundraise. It's invest. Then it's scaling our platform. We believe that strategy is ultimately what aligns the outcomes between our private LPs and our public investors, all to generate long-term shareholder value, not only for you but in the same time, also generating the right outcomes for LPs, which is uniquely aligned.
We're excited to lay out this roadmap for you today and share it with you. So the investment case is really simple. One, everything we're doing today is being powered by AI. All of our customers are moving in that direction. So for us, ultimately, the infrastructure matters comes first. Building the infrastructure enables the applications. It enables generative AI. So the early phase of AI investing and taking advantage of that secular tailwind is here in this room today. Second, you wanna be invested with the best. You wanna be invested with specialists that understand the industry at a depth that perhaps others don't. What we'll offer you today is the chance to meet our team and meet some of the key partners that drive our strategies.
My hope, again, is you'll walk away with a clear understanding and conviction around our people 'cause ultimately, our people drive our products, and they drive our outcomes. Then last but not least, what we offer to you today is a simple business: high growth, operating at scale, and now about to take off into the next, what we believe, is the next 5-10 years of our journey. First, I wanna start by saying thank you for those of you that have stayed with us the last four or five years, being patient through our transformation. You will be rewarded. I think today begins that journey. With that, I'd like to ask my partner, Kevin Smithen, to come on up here and sit with us. We're gonna jump right into it, Severin.
We're gonna go right into fundraising, which that's where it starts. Ultimately, we have to form capital. I wanna thank Kevin. Kevin's been a fantastic partner and really works tirelessly traveling the globe and talking with our LPs. So first and foremost, I wanna in each of these sections, I'm gonna give you three key takeaways. So it's really simple that we synthesize what we're trying to accomplish. First, Kevin and I will talk about alts. Why are alts important? Because it is one of the fastest-growing segments of the investment landscape today. We're gonna walk you through that math and why the alts is the place you wanna be.
Second, we talked about it before: multi-strat, ultimately having the right product set that fits with what LPs and allocators want on a global basis today, and then creating the right outcomes where DigitalBridge is the right partner of choice, again, for what we do, our street corner, our swim lane. So private markets, let me just tell you kinda where we are today. For those of you, most of you are in the public allocator space, let's give you a little tour in what's happening in the world of alternatives. As you can see, over the past 10 years, the alt space has grown enormously from $4 trillion- $16 trillion. That's quadrupling in value and doubling in market share.
It's incredible. And only 6% of that today, as you can see here in the pie, is a significant opportunity where we can take market share. 6% of total allocation sits out there. This is the fastest-growing vertical that we think in allocators' mind space today. Then you put that behind the backdrop of what’s happening in private markets. Well, look, private markets have been really consistent, and capital gravitates to where it's been treated well. That's what we found out in our journey the last 10 years in talking allocators: steady returns, consistent performance. This is what attracts global LPs and global allocators today. Ultimately, outperformance to public global markets, as you can see, the performance of private funds versus public funds. Then this ultimately drives a great appreciation for our sector.
As we've now moved from a REIT into the alternative asset manager space, you can see that with the steady inflows into funds in our peer set, what you see is an appreciation by public markets for our sector. And as our stock is rerated and ultimately, we sit in a new swim lane, you can see that this is a sector that is highly defensible and where the trading multiples have locked in. The reason for that, I think, is quite simple. This is now an institutional business, large organizations that are publicly traded, supported by global allocators, hundreds of LPs, and trusting us and our peers with capital to make those decisions and to invest. And ultimately, the duration, the durability of our cash flows as an alternative asset manager is quite strong.
Most of our funds are anywhere from 10-13 years in duration. So the cash flows that we receive in the form of management fees are long-duration and mostly from investment-grade counterparties, which gives this the opportunity for us to trade at a high FRE multiple. And then the frontier that we operate in is infrastructure. And this is one of the fastest-growing alternatives. As if you've heard me say on conference calls in the last few quarters, what's really interesting is that today, infrastructure, by and large, by most global allocators, they're underallocated to infrastructure. So the minute Kevin and I walk in a door, we know a couple of things. We know, one, most of our LPs are underallocated to infrastructure. Check. Second, we know they're underallocated to digital infrastructure. That's kind of hall pass two. And then three, they wanna be exposed to sector specialists. We'll talk a little bit about that today.
But in our travels, what we do here is that allocators wanna be with the best of the best. And they wanna be with folks that have industrial experience and understand how to invest through the cycles. And as you can see here, infrastructure AUM just in the last 10 years has experienced explosive growth, 18% CAGR growth. And then digital's growing share of infrastructure. If you took this slide up 10 years ago, digital would be less than 2% of the marketplace. We believe ultimately that digital will go to 20% of the infrastructure bucket. Why? Digital transformation and the amount of investment, investment capital that's going in infrastructure in terms of greenfields and new builds is outpacing traditional infrastructure. And so as capital gets returned, it gets reallocated into the best thematics. Digital is clearly one of those thematics, just like renewable energy.
We believe that ultimately, our TAM is growing, and it's growing quite fast. You should walk away knowing that the wallet size of what we go chase every day, every year, continues to get bigger and bigger. And then ultimately, we are taking greater market share. That's really important, is that we continue to defend our street corner as the ultimate allocator and the leading industry allocator in digital infrastructure. So how do we frame this? Alts are growing, infrastructure's growing, and then DigitalBridge is growing at the same time, and we're taking more market share. So with that, actually, Kevin, I want you to talk about some of the dynamics today. Kevin and I do travel a lot. We fundraise a lot. This is probably the guy that has the pulse of most of our LPs around the globe today. And maybe you can lay out for our group here today just what are some of the dynamics you're seeing today on the road?
Well, look, the narrative with LPs and investors has really been driven by discussion around inflation and rates. And that has driven the narrative for about two and a half years. It's created a bit of a cloud of uncertainty in the alternatives market, which we'll talk about, which is reduced allocations in the last two years, which is starting to turn the corner. But it's also created an opportunity for DigitalBridge, as investors are increasingly looking for alpha generation. So the trend toward alternatives for most of the last previous 10 years through 2021, you know, you had a very low-rate environment, and a lot of the returns were generated through financial engineering.
It was a bit of a beta trade. So now, investors are increasingly looking for industrial specialists that have, like DigitalBridge, our, you know, our principals have three decades of operating history, running mission-critical network infrastructure for some of the world's largest companies. We're doing it at scale. That operational credibility, the development expertise, that's really what people are looking for in capital now. They're looking to add that to their portfolios because, you know, the generalist funds, the beta trade has produced lackluster returns in the last couple of years. Now, they're increasingly looking for specialists. Within the specialist, they're very selective about who they add. Usually, it's one, perhaps two specialists in each segment. We are the leader in this space.
I think our track record, our history, our customer relationships, our operational expertise, this is really what LPs look for when they select a specialist manager. I think that scale, particularly as we talk about themes like AI, which require not only billions but tens of billions of capital, over the next few years, that gap between us and the others in our space is widening. Of course, the other headwind for the space has really been DPI for the last two and a half years across real estate, private equity, and even infrastructure. Returns of capital, exits are down about 60% over historical levels. At the same time, capital commitments to previous funds and co-investments have continued. And so, LPs have had negative cash flow for about two and a half years. And that has pressured the fundraising environment.
This is why, and you've probably all seen these slides, you know, 2022 and 2023 were both down significantly year-over-year. We're starting to see stabilization. I think Q1 was up year-over-year. But 2024, you know, I think we'll see the trough, and then we'll see where the growth goes from there. But we are seeing, you know, definitely some green shoots from a macro perspective. There's a few areas that we're seeing specialization's really important in. Within digital infrastructure, Marc showed a slide where 20%-25% of the deal activity is now in digital infrastructure, up from 5% just several years ago. We think this will continue to grow. And our investors in this space are really looking for specialists in the digital infrastructure space.
They've had a little bit of bad luck investing with generalists and trying to do it directly, particularly in the fiber area, Marc. And I think that, you know, they're now increasingly seeing the value of those customer relationships, the development expertise, and particularly that operational prowess through a challenging economic environment. When credit, which we'll talk about in a minute, is not cheap, and capital isn't cheap. And so you have to be able to operate through these periods as opposed to just sort of refinance and drive growth through M&A and cheap capital. The other areas where specialization is really important are energy transition and alternative real estate. And we're seeing opportunities, Marc, to expand our strategies into these areas where through partnerships, we can add that expertise in energy transition and alternative real estate, similar to the growth in logistics.
Same customers, by the way, right, that have a logistics warehouse. That became a huge area of growth for real estate outside of commercial real estate 10 years ago, five years ago. We think over time, data centers in particular could become the next big growth area of alternative real estate. Some of these other areas, as digital infrastructure grows within infra, energy transition and alternative real estate are huge opportunities for us.
And they're touching our ecosystem.
Yeah.
I think that as some investors look to reallocate out of CBD office buildings and, and retail, that pie in terms of what sits out there in the real estate bucket is still there. So what we're finding is that we can go fight for that capital. Same thing on energy transition. When we bought InfraBridge a couple of years ago, and we, we got into the middle-market infrastructure space, and we had a renewables team, we saw that there was a huge opportunity to also think about how to power our infrastructure and why shouldn't we participate in that. So we'll talk a little bit about that today. These are all areas where we see adjacent opportunities. Talk a second about DPI, Kevin. This is something that public investors don't have as much exposure to 'cause you and I are focused on private markets. This is actually probably the number one thing I hear when I go to fundraising meetings globally today.
So two years ago, it was about what we call denominator impact, where the overall pie was shrinking because the public equity portfolio was down 20%-25%. Now, it's changed really in the last 18 months where two and a half years of not getting exits and limited distributions from their alternative portfolios have caught up. And so now, by nature, even though public markets are near record highs, you're seeing private market allocations at or above targets for many of the largest investors. And with limited liquidity, they've pulled back on new allocations to funds, particularly private equity, real estate, and to a lesser extent, infrastructure.
Well, it makes last year's results actually pretty good. It was a tough environment, and you and the team managed to raise a lot of capital, so. So what's working, right? That's kind of the setup. Why don't we talk about some of the things that you and I are working on today? We made the decision to get into private credit almost five years ago, working with Dean Criares, who's here today. We're gonna hear from Dean, who worked with Ben at Blackstone for many years, and Mike Zupan. Great team that came over to us. We see that as a big opportunity. But when you take a step back at 50,000 feet and you get into the heads of allocators, why are they focused on private credit today?
Well, I think, first of all, from a lender perspective, the single B, double B equivalent, unrated issuers, have been largely neglected by the banks, over the last several years. So there's a huge opportunity for private capital to fill that void. And as we've seen the growth in activity from digital infrastructure from ourselves and other sponsors, credit had essentially lagged, the equity opportunity. And now, there are, you know, with so much capital deployed, you know, let's call it a $200 billion TAM on the equity side. Now, there's a market developing for private credit digital infrastructure. For LPs, they're getting superior risk-adjusted returns, right? You're higher up in the capital structure. So during an uncertain economic time, you can generate double-digit cash yields with low teens IRRs.
And equally as important, you're getting that reliable income, and the duration of the funds is very important. We talk about the numerator effect. Private credit funds give you your money back three to five years. You get refinanced, maybe Seven-year fund life as opposed to 10-15 years for most infra funds. So that has a big appeal right now in terms of pacings. Until this numerator effect goes away, people wanna rein in their duration of their allocations. So private credit has a lot of runway, in our view. And you know, given the great performance that Dean and his team have delivered so far, it's a tremendous opportunity for DigitalBridge to take share in this space.
So of the two areas where LPs are still looking to allocate, the top two happen to be where we are focused the most, which is private credit and infrastructure. So you hear this consistently. And what you're getting is long-duration contracted cash flows, low correlation to GDP because you've got secular themes like mobility, cloud, and AI. And so the secular kinda trumps the cyclical here. And you've got very good, generally speaking, counterparties. And so all of that uncertainty that is impacting growth equity, private equity is a little bit, you know, more benign and really benefiting infra and then infrastructure credit even within private credit. So these are the opportunities. So private credit, you know, will continue to grow as an asset class. And then I think the digital infrastructure portion of private credit will grow within private credit.
This is a great opportunity for us over the long term. The other area, of course, is still a focus for LPs. Pretty consistently during the last couple of years has been infrastructure. So again, long-duration contracted cash flow for many segments of infrastructure, including much of our portfolio, inflation protection, which is a very important thing in a period of high inflation and high rates. You know, some of the secular themes that we're talking about; this is a key area of focus. And we're starting to see digital infrastructure catch up. Deal flow, as Marc showed, is 20%-25% of recent activity. But AUM dedicated to the space is still only in the low teens. That will ultimately converge.
So digital as a percentage of the pie within infrastructure should grow to 20%-25% of that $1.4 billion market, which in turn will grow to about $2 billion over the next several years. So these are all reasons why we think the digital infrastructure TAM for DigitalBridge is gonna grow from about $200 billion today to about $500 billion in the next five years.
What's really interesting is that when you have this conversation with global investors today, private LPs, this data completely correlates to what you and I hear on the road. 96% of investors said they're either gonna increase or keep their same allocation. That is an incredible statistic and bodes really well for the conversations that you and I are having right now with our LPs.
So as I mentioned, we expect infrastructure to grow from $1.4 billion to about $2 billion, over the next several years, high single-digit CAGR, and digital growing at probably double this rate, within infrastructure. So it's very interesting. Five years ago, our fundraising team was Marc and myself, and Leslie joined us about that time. Really up until a year ago, the team was very small, on the fundraising side, only four sales reps, senior sales reps, on the team, which we'll talk about in a minute. We've had to focus our time, Marc, on really the top 25 global investors. In fact, nine out of 10 of them are investors with us today. So we did a very good job focusing on the world's largest alternative LPs and to a lesser extent the top 25, right, which we also have a very high penetration of.
They are today between 5%-8% allocation to infrastructure, right? All of these trends in infrastructure, as they built out their private markets portfolio, alternative portfolio, infrastructure is at least 5%. And in Australia and Canada, who have been doing all probably the longest, it's actually up at 7% or 8% or 9% or 10%. And so, as a firm, as we grow our sales force from four to 11 last year to 11 today to 21 in two years, we're now focusing on investors 26 through 100 and then ultimately 101 through 999 or 1,000, in terms of our addressable market. We haven't had the bandwidth to go after these investors. So we'll talk about this in a minute. But the 26 through 100 investors, their allocation to infrastructure is only about 2%-2.5%.
Yeah. And that's a big opportunity. And as we think about where we've had the best results in the last six months, we really see a huge opportunity in Asia. Now that we've stood up a team of five in Asia, that team's working really well. A lot of great wins coming out of there in 2023 but a deep pipeline in 2024. And again, in the U.S., finally starting to penetrate the pension systems, which historically, we hadn't had a lot of success. But now that we're on our third vintage, pensions, U.S. pension systems typically, one, they don't go to first-time funds. Two, they wanna look at the performance of the second fund.
And as you see some of the early results in our fundraising and our third flagship strategy, we're getting a lot of the U.S. pension systems already closed in the fund and now allocating to us or in the data room or doing their on-site diligence or moving forward with documents. So we see a big opportunity in the U.S. to go chase U.S. pensions. We see a big opportunity to attack Asia, which we previously had not attacked. And we still continue to perform exceptionally well in the GCC. And we perform exceptionally well in Europe where, again, people are underallocated.
Mm-hmm.
That's one of the key things here as we set up and we, we talk about some of the numbers here.
I just wanna finish up on that slide, Marc. I think we are still growing at the top 25 investors. The strategy there is to cross-sell across multiple strategies.
Yeah.
So that's where the multi-strat focus is gonna be on our top 25 accounts. Our flagship, infra equity investors push some into credit, into core, into other strategies, into co-invest. That's where we can grow. And the check sizes are continuing to grow with those top 25 LPs. At the same time, for 26 through 100, it's really getting them to focus on our flagship and private credit strategies initially. And then we can expand into, when they start to get that allocation up to 4%, 5%, 6% on infra, then we can focus them on, you know, the sort of new strategies that we'll talk about today.
Well, let's go there. Let's talk about the strategy. You and I are very involved in fundraising. Ben has the best quote. My partner, Ben Jenkins, about fundraisers, "Everyone in the company fundraises." That's actually true. We ask everyone to go on fundraising meetings, which is some of the special part of the firm that your teams always go out with at least one operating partner in the room with them to pitch the story. But the story for us in fundraising, first and foremost, is about team. I wanna talk a little bit about the team. Wanna talk about our expanding solutions, the different products that we've developed internally. Kevin's also our head of strategy and is very involved in product development. And then, as Kevin just said, how are we expanding the investor base? What's the math behind it?
How fast can we get them into our products? So let me gush about the team a little bit. Kevin runs Capital Formation. He's had a great, great history here in Wall Street, 30 years, formerly at Macquarie and at Lazard and Co . He's got a great track record of talking to institutional investors but most importantly, understands what works and what doesn't work. Having the pulse of what investors like and dislike is really probably, I would say, Kevin, your number one talent. Behind you, Leslie Golden, great partner to us, fantastic partner, operates the team, helps keep everyone in their swim lanes. We don't have this person yet, but we have a new head of private wealth, which is really exciting. We, unfortunately, couldn't announce him today.
But as you can see, private capital formation, as you've heard from some of our peers that are in the alternative asset management space, it's a big part of their capital formation. Again, I won't name names of who we compete with, but they have done a very good job the last 4-five years raising private capital. We intend to be in that space. We intend to own the street corner in terms of going out and getting private clients to allocate to digital infrastructure, which we just didn't have the time nor the depth. But now, we're building a team, and we've got a great executive to go lead that effort. As you can see, it's a global team. We've got nine people here in North America, nine folks in Europe. We're up to seven people now in Asia.
And we're growing that team, as Kevin said. We plan to almost double that headcount, over the next two years as we continue to build out our platform and as we continue to scale. And so, look, the benefits of scaling our platform are evident. It's really simple. When you look at the algorithm, Kevin, of your team in terms of salespersons against capital formed, walk us through that step function and where we're going.
So we think of a fully functioning senior sales rep as someone who's been on our platform. Our experience is they're not really producing, in terms of revenue for the first 12 months in a material way. It takes them a year to really learn the nuances of our specialization, our industrial approach, and our asset class. So we had seven senior sales reps that joined the firm, at the beginning of 2023. Most of them came from the InfraBridge deal, and some organic hires. Those sales reps are now starting to produce. And you see it in our weekly sales funnel. And they've been building out relationships. We have teams now in Hong Kong sales offices, Abu Dhabi, Zurich, London, and Singapore, right? Local language people. Language is really important for LPs from 26 to 1,000.
The language skills, for the biggest investors, they have a lot of expats, less important. They do business in English for the most part. The next mid, mid-tier and the smaller investors, very important to have a local presence, local sales coverage. You have to translate all the documents into Korean, Japanese, some German, or French just to pick four languages. And there are many more. This is critical to the LP experience and your ability to penetrate these accounts. So as the seven reps are now coming up and starting to hit their stride, about we expect about $400 million per year in fee and bookings per rep. Some years, it'll be higher. Some are product specialists. But by and large, through the cycle, $400 million a year for principal or MD, right?
As we grow from four to today, 11, and then within 2-2.five years, we'll be at 21, that is going to increase our bookings capacity materially, Marc. The relationships, particularly on those accounts 26-1,000, that's really the focus of these new sales reps. So the goal is to be able to deliver $10 billion per year of gross FUM consistently and organically and integrate and support any new M&A that you and Ben do, and help launch those new products. So with that, you know, if you do the math, we have some accounts that are still sort of legacy Marc and Kevin accounts. We're gonna grow from new bookings annualized capacity a little over a year ago of $1.6 billion to we expect $8.4 billion within the next 2-2.five years. That is really the key, from my perspective, in delivering the guidance.
Yeah. It is. And I think also the other importance there, Kevin, is these smaller accounts are also paying higher fees and better margin.
Yep.
And so these are folks that, most importantly, as we build out our co-investment platform and we build out our continuation funds, we get paid.
Yeah.
On those economics, which is something that was more difficult last year when we were raising capital. We had to give away some of those economics. But as we go forward, we're really confident now in our ability to capture those economics. And so with that, you've now seen the backdrop and how we're scaling our team. Then ultimately, at the same time, we've got to have the right solutions that fit investors and what they're allocating towards. So on the left here, you've got our portfolio allocation buckets in terms of where we're looking at: fixed income, private credit, infrastructure, private equity, public equities, venture, and real estate. And then to the right, you see the different businesses that we own and operate, which fit with those strategies.
So ultimately, our current strategies today are flagship strategy, our co-investment vehicles, which we think we're best in class at, credit, which we're now moving into our second strategy, InfraBridge, which does middle-market infrastructure, our core funds, our liquid, and venture products. All of these are aligned towards what ultimately investors want. And what they want is they want the ability to purchase multiple strategies from us. And at the core of that is our digital infrastructure flagship product. Adjacent to that are co-investments along with continuation vehicles. To the right is private credit. Then we move into our liquid products, our two strategies, our late-stage venture growth fund. And then to the left, we have Core Plus, and we have InfraBridge, again, investing in middle-market infrastructure: transports, logistics, energy transition, and middle-market digital. This is the full suite of products. And look, we're gonna continue to innovate.
What's been great about this business that we built is we've demonstrated the ability to do it through M&A, through the acquisition of AMP Capital. And we've demonstrated our ability to stand up new teams, backing Mike and Dean, backing Alex Villela in late-stage venture growth, and then standing up our two liquid platforms. We have the ability to buy and build, very similar to what we do at DigitalBridge. We're not afraid to innovate, and we're not afraid to stand up new teams. So let's talk about the expanding investor base real quick. This to me is really the story. If I look at the depth of our pipeline today - we'll get into that in a second, by the way - across our product set, there's just a much deeper pipeline of opportunity for us today. Just quickly walk us through that.
So on our first two flagship funds, we went from about 30 investors to 50 investors. And we really think with the growing sales force that we have, the track record and ultimately DPI that we'll deliver, that we should be able to get to, over the medium term, to about triple the number of LPs over $25 million commitment size. And that is really, really important. We've spent a lot of time. These LPs are, and Leslie and Chris will talk about this in a minute on the panel, consultant-driven. They are very localized, the language skills, having that LP experience in each region, and supporting these LPs in their home market and their own home language, that is really, really critical. And so really, the focus of ours is on these higher-margin SMID accounts. And there's a very, very long tail of this.
We're still gonna be able to grow, we think, our large investors that have been with us through cross-selling to other products. But ultimately, the focus is on this first, the top 100, 26 through 100. And then as the team grows out in the next couple of years, we can go from 101 to 1,000. At the same time, we are starting to get traction and engagement today from some of the private wealth channels. And we will be building up that platform. It requires some infrastructure, requires time. But our asset class is resonating, particularly AI, data center opportunity, resonating with private wealth. And that will be an important channel for us long term.
So the focus on my team will be not only institutional, but in the background, we will be developing, and you'll see, hopefully, over time, some FRE contributions from the private wealth and family office community.
Yeah. I, I anticipate that that will be a big area of growth. We've, we've essentially have allowed our peer set to go, go grab that space. And they're raising a lot of capital in those channels, and they're raising capital for some of their digital products. But those clients have not had exposure to our products. So we're, we're confident that, that we'll be successful there. Again, new head of capital formation for private markets, for the high-net-worth channel. I'm excited to bring him on board. And I'm excited to grow that. I think that's a big opportunity for us. And ultimately, we've gotta see our TAM grow, right? So the way we think about it is, obviously, we've been sitting here over to the left in infrastructure, $1.4 trillion. We mentioned it at the beginning, Kevin.
We do think real estate's an area where we can attack, particularly in stabilized data centers with 15-year leases, investment-grade counterparties. Again, as allocators rotate out of CBD office, they rotate out of retail. And perhaps even they rotate out of multifamily if it gets overheated. Digital is digital real estate's a great place for them to go. And then private equity. A lot of what we do straddles private equity. And some of our strategies may seem almost private equity-esque. We're getting that opportunity to us to drift into that lane as well. Well. The key here is there's a lot of pockets of capital for us to chase.
Yeah. And we're seeing, which Jon and team will talk about this on their panel, unlevered yield development yields in AI data center infrastructure that are facilitating and really catching the attention of real estate and particularly private equity investors. We announced our partnership with Silver Lake, and obviously a leading PE firm. But we expect we're starting to get inbounds from private equity investors looking to invest directly in our strategies. And so that, I think, is an opportunity. It's a much larger market than infrastructure. So if we can get 5% of a $2 trillion real estate market, that's $100 billion of additional TAM. Digital infra will go from 12% or 13% of infra to 20%-25%. Infra itself will grow.
Then private equity, we get a small piece of that sort of thematic, tech private equity, very focused on finding the next way to play AI. We think we can get over $500 billion TAM from about $200 billion today. That's really the key, for us to continue to grow, our fee AUM consistently over the next five years.
And so, look, this is where we are today, in the capital formation process. To some of you, we told you we'd give you a little more detail into where we are in our fundraising process. First and foremost, we have over 400 investors working across multiple products. This is the deepest amount of activity we've had in our pipeline in the history of the company. As I said earlier, the increase in the geographic footprint and the expanded resources that we've given Kevin and the team has seriously grown our pipeline and opportunity. And so that combination of existing investor reups and new logos, we're averaging over 60% reups. And that'll continue to grow as we go deeper into the third strategy. And then obviously, the new logos are critical. So in terms of total pipeline today, we've got over 400 investors engaged across our products today.
Flagship three is right there, our new credit strategy. We have multiple co-investment vehicles in the market today. Over 200 investors in the data room, which means signed NDA, reviewing the fund product. Active diligence is they've engaged. They've hired an advisor. They're committed to the strategy. Then ultimately, advanced DD means that they've come to our offices. They've made the decision to allocate with us. And that's over 60+ investors, again, working across multiple products. So in terms of where we are as we take shape and focus into 2024, you know, 50% of our fundraising this year will be in our flagship product. We do think there's about another $4 billion-$5 billion of fundraising that we can go chase in flagship this year. And we have high conviction around those numbers, high confidence intervals.
Looking in the co-investment bucket, we have seven syndications currently in market today. So that's a lot. We're pulling the curtain back and sharing that with you. And most importantly today in co-investments, Kevin, you're having success getting fee and carry. And it's important that people understand that when we're outraising co-invest capital, that does come with associated economics, where previously, that was more difficult to achieve. We're finding that we're starting to hit our stride there. So seven syndications. There's over $3 billion of capital that we're forming there behind some of our best companies. And some of those companies, obviously, are focused on AI data centers, mobile towers, and edge computing. You can kind of extrapolate which companies those are. But these are the companies that are winning big logos and require incremental capital. And so we're midstream in fundraising there. Last bucket, 25% new strategies.
So that's principally our new credit strategy. In addition to that, our SAF fund, which is our core vehicle, we're still out fundraising there. Liquid continues to perform. They continue to raise capital across the two strategies. And then last but not least, DigitalBridge InfraTech, which is our late-stage venture growth fund, also out fundraising. So it's a combination of sticking to what we know best, bringing investors what they really want, which is exposure to our best companies, and then last but not least, standing up new products, accelerating new products, and delivering that across a wide range of investors in the deepest pipeline we've ever had. So literally over $14 billion of capital looking in our pipeline today. So we feel really good about where we are today and where we're gonna go in terms of capital formation.
So very quickly, Kevin, we put two slides in here. Can you walk us through really fast just before we go to the panel just where talk about fundraising in that cycle real quick so investors understand how fast it takes to move people through the funnel?
Well, typically, each product or strategy will be in the market for 12-18 months. And they're, you know, as we bring on a team, there's, we start to do pre-marketing before the official launch, as many as sort of three months ahead. But the revenue there, you know, typically, particularly in this environment that we're in, revenue tends to come in, you know, toward months 6-18 of the cycle. And so you get the investment management fees that close. But what happens in subsequent closes is you get catch-up fees. And the catch-up fees go back to that first close. And here, it this is my sort of easy way to sort of think about it. You know, you get fees that go back to the first close.
So really, what matters is when you start the meter, right, and then when you get to the final close. The costs are front-end loaded. They actually start before you even launch the fund, right? And so if you look at the profitability of a fund itself, you're really starting to break even kind of in month nine or 12. And then you get to that final close with the catch-up fees, and you get to normalized margins, right?
So we're kinda two quarters through flagship three. We're now moving into that next phase, right, that 6-12-month phase in flagship three. So would you anticipate strong participation kind of in the next sort of 6-12 months in flagship three?
Well, look, I think we've talked about the engagement that we have, you know, on all across all products. I think that should have the ability to drive through this profitability, if we're able to execute on that, that funnel, which we intend, intend to do. So I think that, that engagement, the pickup in that active engagement.
Yep.
Will flow through to profitability, you know, as that engagement is converted.
Well, thanks, Kevin.
Without being too specific.
Yeah, yeah. No, no. Appreciate it. We can't be too specific. But, look, this was an important part of our presentation today. We wanted to give you an in-depth view in how we're approaching the market, how we're ultimately participating in what we think is one of the most, scalable and biggest ideas, which is alts. You've heard from us today, the multi-strategy, approach to how we're conducting ourselves today. And then last but not least, we do believe we're the partner of choice for allocators. And as we go through the presentation today, you're gonna get, more exposure to the team and, and hear how we create that difference. So with that, what I do wanna do is invite my partner, Ben Jenkins, up. Thank you, Kevin.
I wanna invite Leslie Golden up, Chris Falzon, who's our Managing Director in fundraising in the Americas, and then Dean Criares, who runs our credit team, to talk about fundraising.
All right. You got, you're all good. So that's it. I was gonna do the intro. That's fine.
Okay. Is that your way?
Welcome. Thank you all for being here. Marc and Kevin have given us a great overview of the fundraising environment and some of our particular strategies. So now we get a chance to have a conversation from the front lines, the people who are out there every day interacting with investors and talking about our different strategies. Leslie, if I may, let's start with you and how you're planning for the growth that Marc and Kevin just talked about.
Yes. Thanks, Ben. So and, and great to be here, everyone. So as Kevin mentioned, we are growing the team. When we started, we were a small team. We grew it to about 10 people in 2020. We're now at 28 people. That growth really has come through the localization of the teams, particularly in sales and sales support. So having teams on the ground in Japan, in Korea, in the DACH region, where language is a very big factor, and being able to communicate with investors, particularly the small and medium-sized investors who are starting to allocate to digital infrastructure, and being able to educate them in their own language. So that's been a huge part of kind of keeping up the pace, with the growth that we're anticipating.
Chris, in North America, how are you approaching it?
So, Ben, in North America, amazingly, we're a team of three individuals at the moment, comparative to one of the largest regional opportunity sets from a fundraising perspective. Here in North America, it's not just about adding numbers, quantums of individuals to the team. But rather, given the growth ambitions of our platform, how do we complete the mosaic? And completing the mosaic is skill set, creating versatility and athleticism on the team to make sure that we're representing the entirety of the platform going forward to the best of our ability, but also building resiliency and depth on the roster across experience levels on the team, which will be critical to meet our goals.
Dean, you're obviously a product specialist. What are you seeing and hearing out on the road?
Yeah. The investors that we're talking to on a constant basis are not excited about supporting middle-of-the-road, mid-tier managers who are not at scale in the generalist community. So they're with so many good options to pick from with established, very large credit managers with reasonable returns, they're not anxious to start supporting other businesses. And in fact, those same large, established, proven managers in the generalist sphere are doing all they can to take all the oxygen out of the room for any newer managers. They are offering reduced fees for large commitments, which makes it even more difficult for new managers to come in. What they do want, luckily for me, is specialization. They've gone through their asset allocation models. And as was alluded to earlier, they are well underallocated in particular in credit to the digital infrastructure community and pool of assets.
So we're actually filling a void for them. And what they rather enjoy and where I get real connectivity with a lot of the investor universe is when we start describing our in-depth knowledge, all the partners that we get to draw upon, in terms of operating partners and consultants, advisors to the firm, and explaining how we connect with them, talk to them, as we seek opportunities and also as we diligence opportunities. So that is very powerful and resonates when they see it in action and they look at our portfolio. And then we're able to give them examples as to how we talk to people throughout the community.
Just wanted to add something to Dean.
Yeah.
So what's been most powerful for us has been really showing investors, as Dean said, that value that we add, whether it's sitting in a room with an operating partner and showing how an operating partner or one of our senior investment team members can drive organic or inorganic growth at our companies who are actually taking some of our LPs to actual sites. So site visits and seeing, you know, where investors can see where their capital is going, and the development that is, you know, occurring across our tower platforms, our data center platforms, and really across the whole ecosystem has actually really been the most impactful in terms of due diligence and getting investors committed to our, you know, to the platform.
And Ben, if I may, one thing that's important to us, I know, as we built out the platform was, and it's a nuance that some may not have real insight to, but sometimes it's a question. You know, we don't invest in the, we don't invest credit in the platform companies owned by DigitalBridge on the equity side. So this is meant to expand the number of logos that we, that DigitalBridge is in interaction with.
Chris, we talked about localization. But what else are we doing to grow our account base?
So I think for us, globally, I, I think what we're trying to do is it's funny. When you were talking about the asset tours, I think of it's almost the opposite of NIMBYism. It's YIMBYism. In my mind, it's, "Yes, I want an asset in my backyard, and I wanna go see it." So I think it's a little bit of that as well, which is to say that we are a local partner, not only from individuals that we can field and engage with for investors, but also to show we truly are a specialist at scale, which is to say that we are investing globally in providing you that true specialist exposure that one would want. And so I think that is one key element that comes to mind for me, Ben, in terms of how we can really enhance those relationships on the ground.
We're actually also educating those investors. So investors have been, you know, allocated maybe to more generalist strategies, and they're looking for that alpha generation. So, as investors are really opening up that allocation to specialists, they need to understand what the asset class is about. And so through localization of our some of our annual meetings and panel discussions and roundtables that we're bringing on the road to these investors has been really very helpful in bringing in some of these smaller accounts who have not been accustomed to, you know, to allocating to us or to allocating to the sector.
And continuing with that theme, what about the consultants, which are an important constituency here too?
So, Con, you're right. Consultants are, you know, hugely important, particularly in with the SMID accounts. We have fantastic relationships with some of the leading global consultants in the sector. But it's even more important as we're looking to grow the investor base from the top 10 to the top 100 to the top 1,000. We need that buy-in from the consultant community, which we have, and really bringing those investors along the ride with the consultants is going to be very, very helpful in terms of growing that base. I don't know if,
Completely agree. I think also what you'll see is it ties back almost to the life cycle of a fundraise is that there is a bit of a lag in terms of consultant engagement uptake. And so I think there is this snowball effect.
Mm-hmm.
In terms of as the product across the board matures and that maturation feeds success with the consultants and those flows with the SMID accounts accordingly.
We've talked a lot about people. There's an IT and systems element to this too. Our new Chief Information Officer, Steve Stryker, is here, and has been doing a lot of work with the capital formation team. Can you guys describe some of that, maybe starting with Salesforce?
Sure.
For better or worse, by my colleagues on the team, I have been appointed the dubious maybe title of Salesforce champion. I would say that at the heart of any good engine room from a capital formation standpoint of all the institutional alternative asset managers is good technology usage and analytics that feed out of it. I think if you look at what Leslie and I are trying to do with the team globally and maybe to double-click into the North America team, we're very actively trying to curate the data inputs that we create as a team and then also utilize that to extract value not only from an internal business intelligence standpoint and transparency and management perspective, but also from an external business insights and how do we engage investors and create efficiency and operational leverage that way too. Leslie, anything to add?
Yeah. I think it also helps in terms of the cross-selling that Marc and Kevin spoke to earlier, particularly as we are, you know, we're looking to bring in new strategies. You know, we brought Dean in on the team. Being able to cross-market from, you know, from equity to debt, and having that information at our fingertips, has been very, very helpful.
Not to steal Steve's thunder, but there's some really interesting AI applications that can be deployed in this regard. We wanna be not just a provider of infrastructure for AI, but we wanna be an active user as well. Dean, coming back to credit, what is the current environment with maybe higher-for-longer interest rates and a sort of, less certain macro backdrop doing for the deployment side of your business?
Yeah. So I would, I'm gonna compare ourselves to the generalist again, Ben, if that's okay. And, you know, I'd start the dislocation. I'd date it back to really the first conflict in the Ukraine, really set in motion a lot of paranoia, obviously, exacerbated by, you know, the inflationary aspects that we've all been living through and the steps taken to combat that inflation. So there's still a fair bit of uncertainty in the credit markets. And that's typically good for us, for credit investors. As compared to a generalist, though, the generalists are almost tethered to mergers and acquisitions activity. It's their life's blood. And there's been very little of that over the past two years.
So, at the very same time, if you look at our clients, mid-market, established operators with track records that are discernible, we have seen an increase to our pipeline over that very same time because we're not looking or dependent on M&A activity to drive the opportunity set for us. The fact that interest rates have come up, one might say, "Oh, well, then people are backing away." Not really, because they're looking at the return on every dollar they put into the ground and saying the return available to them on those dollars far and away exceeds the cost of our capital. So they're anxious to see our capital in their doors, which allows them to expand and develop for their ultimate achievement of getting a frothy exit on the way out.
Speaking of track records, can you describe how no longer being a first-time fund is impacting?
That was well-turned, Ben. That was well done. Yeah. You know, having a first-time label as you're going out to the investor community, there are folks, investors who in their bylaws state they cannot invest in first-time funds under a new platform. So having that behind us with what we think is a credible portfolio and returns should easily triple the number of addressable market investors that we're looking at.
Right. We know all of the investors, right? So we know who's not looking at a first-time fund. So we, you know, like, you know, Chris and I are able to map who to go to, right, as you're now not an emerging manager, right? You're an established manager. In addition, just, you know, from a consultant basis, consultants do the same way as investors. They're not gonna look at, you know, a first-time fund. And now we've kind of kind of passed that, with our credit funds. And so we're able to open up kind of the aperture, for, for these accounts and as well as the consultants.
Great. Thank you all. Let's continue with our next panel, I believe.
Thanks, Ben.
Hold on, Chris. Thank you.
Thanks, Ben. So now we're gonna move into the next phase of our presentation, which is to get into the invest part of our cycle. So look, I think all of you have been tracking the progress around AI and the enormity of the opportunity. And we really do believe, much like Sam does, that compute is really the currency of the future on so many different dimensions. And so building that infrastructure and participating in that in the early stages is so critical for what we do. And ultimately, again, back to the three takeaways around what we're trying to accomplish. One, we believe there's a massive TAM for us to play in. And we're gonna walk you through some of that math. Second is we do think the way that we invest is differentiated.
We do think ultimately, the teams that we pick, the strategies that we implement create incremental alpha. We wanna walk you through that. Then we wanna talk a little bit about AI. We'd be remiss if we didn't spend some time today talking about artificial intelligence and how it impacts our business from an infrastructure perspective. First and foremost, this is the sandbox that we play in every day. Every one of these logos every day touches our network, either transmits a signal on our tower, is an active compute in our data center, or is interconnected with us or uses our fiber infrastructure, our small cell infrastructure. You cannot avoid utilizing our infrastructure on a global basis. These are our core customers. At the same time, what we do is foundation work, foundational work, that all these networks don't exist without our infrastructure.
At the same time, as we said earlier, we're in a business where CapEx is compounding. It's not decelerating. We would offer to you that perhaps our customers are accelerating their CapEx intentions. And so on a global basis, we've got a TAM that's growing at $400 billion a year. And if you look at the last three years at DigitalBridge, we've been investing over $20 billion per year in new infrastructure. And again, that's accelerating for us. And so if you look increasingly around the transition to a digital economy, we're investing at the same speed with those key logos, not only in the internet, but in mobility and cloud and AI now AI. A fourth new swim lane has been created for us to work with customers on a global basis. So we have great optimism around those tailwinds.
I almost laugh because every time I go to investor conference, I have this slide up. I'm always somewhat surprised by the fact that mobile data consumption continues to grow. AI only exacerbates that problem. As we move to generative AI and those applications reside on your mobile device, what will happen? Networks will be congested like they've never been congested before. We went through this already. We lived through the transition of 3G to 4G and now from 4G to 5G. If you think about those catalysts that happen in mobile networks from 3G to 4G and 4G to 5G, we had things like instant messaging, right? We had email. We had videos, social media applications. Now we're gonna have generative AI to the handset.
So we're long-term bullish on the impact of artificial intelligence, particularly generative AI and how those applications reside on your cell phone and ultimately how most of that compute will proliferate to the edge. And at the same time, we still have an enormous, insatiable appetite for CapEx in data centers, $1.3 trillion of CapEx in data center spend and another $1 trillion in global mobile CapEx coming, over the next five years. So these are two really deep swim lanes in terms of CapEx participation. And then let's not forget about the cloud. We're in the 11th year of cloud computing. And now what we're seeing is the manifestation of cloud work models as being profitable. But it took us 11 years to get here to where the cloud companies are now making money. And we're gonna go through that same journey with AI. Initially, AI will be unprofitable.
Eventually, it will be profitable. Then it'll be very profitable. So we look at this journey that we're about to go on in AI on a similar arc to how we saw in terms of public cloud. Now, if you look at the first quarter in 2024, Amazon surpassed $100 billion in annualized revenue for the first time. And if you look at the growth in revenue across the three major cloud players, all of them are experiencing massive double-digit CAGR growth. So as much as we're excited about mobility and we're excited about AI, we continue to be very excited about cloud. And our customers, at the same time, while their revenues are growing, they're investing in their CapEx. And then last but not least, 5G deployments. 5G deployments are still happening.
Our economy is a leading economy, Europe, then Asia, and then the rest of the developed world. But $1.5 trillion in total CapEx will be spent by 2030. And this is exactly what we're talking about in terms of the network pressure, the same pressure we saw in LTE, the same pressure we saw in 5G, the same pressure we saw from 2G to 3G. As you move towards densification, the networks are harder to build and construct. And so we're moving into the second phase of CapEx in 5G. And we're seeing it across all of our tower companies across the globe. There's going to be significant CapEx in network densification. Now, if you look at this in terms of where we are in densification, we're just starting in the U.S. and in Western Europe.
But look around other parts of the world where 5G is just being lit up. We're literally in the early innings of 5G infrastructure. Remember, we operate tower companies all around the world. We're not just focused on the U.S. We're not just focused on Europe. We run a global business. And so we are pretty excited about densification and what the implications for the growth is in terms of the amount of capital we're gonna raise and how we deploy that capital. And then last but not least, you know, AI is gonna continue to accelerate data center investment. Data centers are becoming really the AI factories. We're starting in these language-based models where they're learning, moving towards generative AI, then also moving towards what we call edge generative AI, and then mobile generative AI.
We see the direction of travel in data the same direction of travel of where cloud computing went. Where now we're focused on in cloud, we're spending a lot of time on the edge. We've seen that just in the first quarter alone at DataBank, where they beat their budget by 158% in terms of leasing, most of that being cloud as the cloud proliferates to the edge. The direction of travel will be the same for AI. The potential for AI is massive, massive. You're gonna see it in our leasing pipeline we're about to show you. But 50 GW in the next five years. Every time that John and I think we have a handle on that, we come up with a new number. Matter of fact, John, come on up here and sit up on stage.
I'm gonna invite my partner, Jon Mauck, our senior managing director who runs our flagship strategy with Steven Sonnenstein here in the Americas. And he also chairs our global data center practice. He's a busy man. But just looking through this for a second, just some of the key takeaways, obviously, cloud, John, still really prevalent in terms of what we're doing and what you're seeing across our 10 data center investments, you know, our platforms, mobility, and AI. All of these things are sort of key transformative moments for us in terms of CapEx, and as ultimately, we think about how we build businesses and how you're building businesses here in the Americas, just kinda walk us through kinda the things that matter in terms of what you're seeing in investment committee and at the portfolio companies.
Absolutely. Thank you, Marc. This is an incredibly exciting time to be talking about data centers and AI and all the drivers that Marc just highlighted, right? So we're at this incredible inflection moment we'll talk about all afternoon. In terms of what we think about differently, we look at every opportunity with two lenses, right? We are both a business builder and an investor, allocator of capital. And I think that's a very unique lens, right? It's I think something very specific out of our background having built businesses. Operational expertise, we have actually signed tens of thousands of leases. We have built millions and millions of data centers. We'll talk about our operating partners in a second. But it's an incredible differentiator, right? Sector focus, this is what we do. And this is actually complicated, right?
It's not easy to actually help the economy shift from analog to digital. That's what's happening today. Customer-centric, we think about this as a solution for our customers. We're not sitting down with the Microsoft, Amazons, and NVIDIAs and saying, "If you wanna lease this or, you know, use that capacity," how do we help them build a solution to address the challenge? Then we create platforms, right? Because again, it's not one-off assets. It's value of that platform to think about how you service the customer and challenge the opportunity. It is a very different way we believe of looking at the market.
Your team, Jon, our team, on a global basis.
Our team.
Talk about the team here in the Americas, yourself, Steven Sonnenstein, your partner who Steven's here. He's somewhere in the background. Hope you find him. There he is.
He's doing a deal right now. So he's not on stage.
He's literally doing a deal. But, you know, in terms of the activity,
Yeah.
In our third strategy between you and Steven, do you see that is that now expanding in terms of total CapEx required and the amount of deal flow? Where are we in that cycle in the third fund?
Yeah. So, the size, the opportunity, the deal flow is. It has never been better, which we think is really unique. The process we have and the criteria for how we look at it has actually never been a higher bar because I think this is a really interesting point. So we're seeing a lot of opportunities but really challenging ourselves to make sure we can create alpha. As we joke a lot, anyone can write a check, right? The question is, what do you do the next day? How do you actually bring value to that business? One of the things you talked about earlier with asset management, what's interesting is all of our investment team, they underwrite the opportunity, and then they work with a company over time. So you actually have to see the result. I think that's something very unique. It really reinforced this notion that we're actually trying to partner with the leadership teams at the portfolio companies to build value.
I think also part of that's 'cause a lot of our team members have been operating executives before.
Yeah.
So not only are they good at originating, but they're good at helping run the business and ultimately creating the right outcome at the same time. So big global team you guys are running. This I think is, is kinda the secret sauce.
Yeah. Yeah. If there's one.
Maybe you're closer to a lot of our operating partners.
If there's one thing I would say that we have really created over the last decade, right, it's this notion of having a really expansive operating bench with very deep sector expertise, 30 years of experience on average. They've actually built businesses. They've been leading CEOs. And when we were talking about this years ago, I think you were still at a kitchen table creating this. This was one of the things that's such a differentiator. It's really about understanding the businesses. Looking across this list, we have Alex Hernandez who actually built the first data center at a nuclear reactor, sold that to Amazon. We'll talk about that this afternoon. He'll be on stage. Christian Belady , who's here as well, I think getting mic'd up. He was actually the first employee to do data centers at Microsoft in 2007. He was there for 16 years. He led the strategy.
He built their first data center. He actually defined terms like PUE. He's got a whole bunch of patents around the space. And now he's here helping us think about the next dollar we deploy. It's a very different approach. And there's a whole list of names we can go through. But everyone around that table is part of this dialogue. It's a family on how we collaborate together and come up with great ideas. It's not simply a process of filling out forms. It's very hands-on and active.
What's interesting is if you look around again, our peer set in the GP space, they maybe have one or two sector expertise. We'll put that up against our 28 any day of the week. We like our chances in a fight. So, you know, part of this is also being willing to take risks and being pioneers in the sector. I think this is truly what defines us as an organization, that we've always been on the front foot of this asset class. We've always been willing to innovate and to take risk. First is this notion that there could be a converged approach to investing in digital infrastructure, that perhaps by owning a series of companies, that we could create convergence amongst those companies. They could work together and create outcomes for customers that we think are unparalleled.
Second is how we finance the asset class. I think for those of you that have followed my 30-year career, like Rick, we were the first to create the cell tower securitization. We created the first small cell securitization. We created the first hyperscale data center securitization. We just did our first green Tier 5 data center securitization with Switch. And so we're always out front trying to figure out how to optimize the capital structure in this asset class. Third, we're the first to create a first commingled fund. DigitalBridge Partners One was the first digital infrastructure commingled fund of its kind. And then ultimately, migrating from a REIT and moving towards this asset-light model as you see in front of us today. And what's next? We've got really interesting ideas on how to solve the power problem. And we're gonna talk a lot about that today.
Yeah.
But, again, it's something we've been talking about for the last two years is how do we deal with power? How do we deal with an aging transmission infrastructure grid? And how can we ultimately get our customers to be grid independent eventually?
Yeah.
Jon, this is actually one of your babies.
Yeah. This is,
You wanna talk about the scaling of a business?
In 2016, we actually acquired a hyperscale data center business. I'll say for the first six months, it was terrifying. Nothing happened. It was just a still pool. But we actually have ramped the business massively since then.
But we signed a 1 MW lease. And you and I were like, "Hi, fucking God.
Woo! The,
That's why we don't sign 1 megawatt lease.
We went from two metro markets to over 30 different campuses globally. We went from, again, one market, one region to continents. We went from 100 MW to over 2 GW. And a pipeline we'll talk about that actually is massively larger than that. We did the first securitization in the data center space with this business. And we really tried to partner to bring in a lot of executives. So we actually helped them really build out that team to make it a scalable global team. This is, I think, a situation where we went to the customers early on and said, "You now have a business with Vantage and the partner, the owner of that business with DigitalBridge, a platform you can trust to scale significantly. And it's paid off.
I'll talk about towers as one that Steven led. But you wanna talk about Vertical Bridge for a second?
I'm absolutely happy to. I'll take someone else's credit. But this is the idea of actually partnering with a seasoned leader. Alex Gellman has been one of the pioneers in the tower space together with you, Marc. And this is a business we've seen scale massively, becoming the largest independent tower player in North America with unique proprietary partnerships like what was announced with Verizon on the build-to-suit strategy , something that's very differentiated and a first time in the marketplace, a big league.
What's also interesting is, I thank Alex for being here. He came a long way to be here. But he's been my partner for 31 years, which is stunning. And thank you, Alex, for that. But this is our third go in the U.S. cell tower space. I think we get better at each turn. But what's also unique is the connectivity to the customer. And our relationship with our carrier partners has never been stronger. Got a really unique joint venture with Verizon where we're building towers with them, where they have ownership economics in that JV. And again, that wouldn't have been something we'd been able to done 20, 25 years ago. But today, we have the trust of the partner. We have the trust of the customer. That's what leads to the scale and the size of this business is having that unique connectivity, with our customers. Well, take us around the world.
Let's talk about. Let's talk about building. Let's talk about your world. Yeah. Well, look, it's interesting. Talking about trust, there's been decades of working with the global cloud players as they deploy the infrastructure. And they've really turned to us as a partner to do that. Today, by the way, we're building 90 different data centers across five continents to support 2.4 GW of new capacity. This is a massive expansion. And it's because of that partnership and the long-term relationship to actually look at that roadmap with the customers. It's an unbelievable journey. And it's, again, it's every corner of the globe today. We are a global business.
I think last quarter, we said we had about 2.2 GW of shovels in the ground. That's now gone to 2.47 GW just in literally a couple of weeks.
Couple of weeks.
The speed and the velocity at which our companies are performing for customers is unprecedented.
Yeah.
I think you've really built an incredible franchise across the 10 investments we have, you know, over 4 GW of power in place today. It's truly impressive. I think this really speaks to the fact of ultimately our ability to buy and build at the same time.
Yeah.
And so.
Play before we get into this. We're gonna play a quick video.
Okay. So we stop here? Okay. We'll hang out and watch.
It's great seats.
Northern Virginia is the largest data center market in the world, serving large tech companies like Amazon and Google. There are roughly 250 data centers here, nearly 4,000 MW of capacity. That's enough electricity to power about 1 million homes. Fueled by the rise of AI, dozens more data centers are either planned or under construction, which will add over 7,000 MW of capacity to the region. This boom in development is playing out in key markets across the U.S. But it faces a big obstacle: getting enough power. We visited one data center developer in Northern Virginia to understand why. Data centers house servers, often thousands of them under one roof, that support nearly everything we do on the internet. In Northern Virginia, most facilities were built to handle cloud computing, an industry that's been growing for the last decade.
But developers are now rushing to build data centers to support AI computing. Structure Research, an independent consulting firm, estimates global data center capacity could roughly double by 2030. Data centers are typically owned and operated by big companies like Amazon and Google or by what's called colocation companies that lease out the space to multiple customers. One of those companies is Vantage Data Centers.
We build data centers across five continents. Northern Virginia is our biggest market. The internet effectively was commercialized in the Northern Virginia area.
Like other colocation companies, Vantage provides network capacity and power while tenants bring their own servers.
This is a 3 MW data hall. There's over 10,000 servers in here. That's why it's so loud, right?
Sureel Choksi is the CEO of Vantage Data Centers. He says this data hall handles cloud computing. But an AI data hall.
It would have 10x the amount of compute power, so several million times the amount of compute power than what you have on your most powerful laptop computer.
AI servers are powered by graphics processing units, which produce about 10 times more heat than the central processing units used by cloud servers. Choksi says the biggest difference between a cloud and AI data center is the cooling equipment that keeps server temperatures down.
We have air that's coming from underneath the floor, channeling through in this cold aisle through the servers. If we contrast that with an AI-type deployment, you would typically see a mixture of air as well as water or liquid to cool the racks.
Vantage is developing three campuses in Virginia. It plans to eventually have 16 facilities totaling nearly 600 MW of power.
It's very clear we're in the very early innings of a very long game here.
Data center growth has prompted grid planners to nearly double their five-year load growth forecast in 2023. Regional utility Dominion Energy is expecting electrical demand in its service territory to grow by about 85% over the next 1five years.
With AI, the amount of power requirements increased exponentially. One of the first places to feel the pinch in terms of power availability was Northern Virginia, just given the sheer scale.
In 2022, Dominion notified customers that new data centers in that area might not be able to ramp up as fast as they would like to until the end of 2025. It paused connection of new data centers to the power grid for three months.
That pause gave us the opportunity to take a look at what we needed to do in the near term to begin advancing projects to continue serving our grid.
After the temporary pause, Dominion connected 15 data centers that year, which Gartner says is in line with the company's average. But some data center developers and investors are concerned about power availability as they look toward the future.
The sort of wake-up moment was last year when we started to do the math around the amount of power that's available.
Marc Ganzi is the CEO of DigitalBridge, a digital infrastructure company that's been investing in data centers like Vantage for about 1five years.
We think the problem is somewhere between, you know, three to four years out where key, key markets will not have power sufficient to ultimately power these language-based and inference models that exist in AI.
Ganzi says the issue isn't generating power. It's being able to consistently transmit enough power to the right places.
We're building additional transmission lines to serve the growing load. We're also adding additional substations. Those are the interchanges, so to speak, the on-ramps and off-ramps for that energy. The very nature of infrastructure is that it takes time to build. And it takes time to site and to permit.
In general, it can take two to four years to connect large new customer facilities to the grid, while a new data center can be built in a year and a half. Dominion currently has about 30 substations in the Ashburn area and plans to roughly double that number in the next 1five years. Choksi says Vantage has sufficient power to meet the needs of its customers across all the data centers it's actively developing in Northern Virginia. But.
If we had more power sooner, we could build faster.
Data centers are also looking for renewable sources of energy to meet their clean energy goals. So utilities are working to meet that demand.
95% of the energy resources that we're planning and that we're bringing onto our grid are net-zero, carbon-zero resources.
Dominion is developing the largest offshore wind farm on the East Coast, off the coast of Virginia. But renewables aren't the most reliable sources of power for data centers, which need to run 24/7 every day of the year. So fossil fuel supplies often supplement power from renewables, which is forcing some utilities to delay their shift away from fossil fuels. For example, a coal plant in Kansas is running longer than originally planned because of the need to power data centers.
Power availability is gonna remain not only a near-term challenge but a mid-term and a long-term challenge in Northern Virginia and really in all major markets.
The real challenge for the sector will lie in the fact that can we create renewable power adjacent to infrastructure to fuel the amount of workloads that are coming, not today, but in the next two, four, six, 10 years as we build out this infrastructure?
Hi. I'm Dana Adams. Vantage is a global provider of hyperscale data center campuses. We build and operate data centers for the world's largest technology companies. We're doing that all over the world. I'm standing here today at our VA3 campus, which is in Ashburn, Northern Virginia. Northern Virginia is the largest data center market globally. Behind me, we are building the first of seven data centers that will be right here on this campus. This site is gonna support 288 MW of IT capacity for our customers. We also have other campuses under construction elsewhere in the United States, across EMEA, and in APAC, all to support the growing infrastructure needs of cloud and AI.
We're working very closely with our customers to understand their AI needs and the implications of that on us as a data center provider so that we can be in the right position to deliver solutions for them as this AI wave really takes off. All that construction is extremely capital-intensive. In our partnership with DigitalBridge, one of our largest investors across all three of our global regions, is really critical to our ongoing success. We have a huge opportunity ahead of us.
So I think that maps pretty well to the next slide, which is just around this opportunity of buying and building. And, you know, the lineage of the firm is ultimately embedded in the fact that we've been operators before. And we understand how to build. We also understand how to buy in the right cycle. And that ability to uniquely pivot between buy and build is ultimately what differentiates us from other GPs in the space. But ultimately, as I think about that, there's market multiples versus development yields, what gets us the highest return on invested capital, replacement cost against what you can buy something for. I think you've heard me say that a few times, Rick, about this notion of replacement cost versus where M&A multiples are. And then most importantly, as you heard from Cyril and Dana, the ability to scale.
Scale is not just about showing up with the capital. It's about having the right land bank. It's about having the right Will Serve Letter. And it's having also the team and the pipeline of resources to do that. And so as we think about this approach, Jon, walk us a little bit through this.
Yeah.
In terms of how we think about new data center construction.
Absolutely. Fundamentally, the other thing I'd really highlight is this is an industry which has been growing and transforming with the demand for cloud and AI, cloud for the last 10 years and AI today. We do have to be able to develop capacity to meet that demand, right? We can't simply go out and just buy the existing data centers. The infrastructure isn't there. So how do we think about it? It's critical, right? It's about leveraging the pipeline. And we have a very substantial power and land bank pipeline we've been developing for years. We'll talk about that in a little bit. But it's actually not something we started today. It's been top of our list of concerns for the last couple of years. And that shows up when we talk about where we're going next, right?
There's a global presence to understand where the customer's going. It's on a partnership with the customer, which we'll also talk about, which is really critical. And it's thinking about leveraging the supply chain. We have a massive footprint in terms of our consumption. We've talked about our data center CapEx numbers for just this year, over $11 billion. And you think about the visibility that gives us into the supply chain to make sure we're actually leveraging that across each of our businesses to make sure we understand where the sources are gonna be. That's critical to meet on time. And over 70% of our capacity is actually from developed data centers versus acquired, which is critical.
The key to this at the end of the day is how do you synchronize this with your building permit, with your Will Serve letter, with your vendors, and then ultimately lighting up the data hall and getting the customer turned on on time?
Bringing all those together at the exact same time. Connectivity, right? Speed to market to meet expectations, being reliable so you're always there, and making the customer happy and having the power available.
So, pause for a second. I saw this over the weekend. I was like, "Wow. This just continues to get bigger." We have 4 GW+ of power online today across 178 data centers.
Yep.
You talked earlier about 90, 90 data centers in development, another 2.4 GW. That takes us the 4.7 GW plus the 2.4 GW. And you're, you're essentially at 7 GW of power online, for our customers across 268 data centers. What's this next bucket sitting out there in terms of what's next?
So in terms of identified opportunities from our pipeline, so these are conversations with our portfolio companies and customers for specific opportunities to deliver data center capacity to meet customer needs. So this is a customer-driven conversation about the size of our pipeline. And you can see since the last time we talked about it, it's up almost 40% in a matter of a quarter, so.
Ultimately, how do you think about this in terms of the existing portfolio appreciates, but at the same time, you're building new value in?
Yeah.
In the new construction pipeline?
Well, that was the demand. So let's talk supply. This page is highlighting the fact that if you look at our portfolio, we have land bank and a power bank that support 7.5 GW. We've been building this for a long time to go out and work with the portfolio companies to find power, to think about getting Will Serve Letters, think about acquiring land at the right locations so we have the ability to service this. Now, we're actually also looking at every opportunity to make sure we prioritize the right deals and the right locations. But this is bringing together that supply-demand dynamic, which is really the strategy.
That's, that's really powerful because ultimately, as, as I said earlier, you know, the, the ones we get through this round of construction of the 90 data centers we're building, we'll be effectively at 7 GW, you know, online. And then we have another circa 7 GW behind that in terms of what we're developing. So really, if you think about that over the next three to five years, that's 14 GW of power on demand. I, I'd be hard-pressed to find another data center around the world that has 14 gigawatts. So it's exciting, what you're doing. Really exciting. So look, the key takeaways is we, we gotta keep moving here.
Yeah.
Operational expertise is critical. I think you've seen that demonstrated here. Our focus on customers, which has really been a 30-year journey for us. And then this ability to build great platforms. We've seen about Vantage. We've seen VerticalBridge. But there's obviously 38 other companies in the ecosystem that do it. And with that, maybe if I could please ask Liam Stewart to come up to the stage, our COO, Alex Gellman, CEO of VerticalBridge and one of the founding partners of DigitalBridge, Geneviève, who you heard from earlier, runs the Switch asset. And Tom Yanagi, head of capital markets. Tom, another one of my key partners. Tom and I have been together now coming up on 20 years. Hard to believe. How many financings have we done? 80? 90? 80. Maybe.
It's gotta be 100.
It's a lot. Liam, you're in charge.
Thank you. Alex, maybe start with you. Obviously, very familiar with the DigitalBridge ecosystem being one of the founders, you know, roughly 10 years ago. You've also worked with, you know, a bunch of financial sponsors, both in the course of VerticalBridge but also, you know, more longitudinally over the course of your career. Maybe give us some flavor as to, you know, what's the difference in terms of working, one, with a specialist, and two.
Yeah.
Working with DigitalBridge.
Yeah. And I think, actually picking up on first of all, pleasure to be here. Thanks for having me.
Mm-hmm.
Picking up on what Jon was saying, I mean, I would even go back further. You know, when, when DigitalBridge said, "Okay. We're gonna become an expert in data centers," they didn't have tower guys do data center deals. They basically brought in Mike Foust.
Mm-hmm.
The founder and CEO of Digital Realty brought in Jon Mauck, hired Raul Martynek, who's now the CEO of DataBank as an operating partner. That obviously has continued. So I see that as a big differentiator between what I see other specialists in digital infrastructure doing, which is have dealmakers in other parts of digital infrastructure do deals in a different sector. And I think the key about all those people and continuing today is they have both operating experience at data center companies as well as invested investment experience. And I think that's probably the single biggest difference because then it allows for value add to the portfolio company.
Excellent. It might be that's probably an operational perspective. Geneviève, from an investment perspective, you know, your career prior to DigitalBridge was mostly in diversified infrastructure. How do you think about the merits of specialization from that investment perspective?
Yeah. No, no. Absolutely. And not to make this about me, but I mean, this is the key reason why I joined DigitalBridge at the time. And I think whether it is at the investment committee level or at the boardroom.
Mm-hmm.
The fact that around the table, there are, you know, individuals who've done it before for 20, 30 years, who've operated assets, are able to have this partnership with the management teams is critical. This is really where we differentiate ourselves and are able to derive better outcomes for everybody.
Mm-hmm. And then, you know, pivoting to you, Tom, you know, clearly a different credit market for the last couple of years relative to, say, the last decade. How do you think about, in your world, the debt investor's perspective on the digital infrastructure and how that impacts our investments?
Well, look, it's obviously a highly important contributor to the overall value delivery and execution of the business plan. You know, John just talked about 2.5 gigawatts of development. That is a substantial amount of capital. At the same time, you know, it's generally success-based, highly predictable, stable, cash-flowing businesses with a level of growth behind it that is unique versus other infrastructure activities. And so, when we go to the capital markets, it has been an interesting time over the last two years. There's a period of volatility where the markets were really tight. And we've settled in at a level of higher rates, but maybe less volatility, more capital availability from a credit markets perspective.
When the credit markets look at our business, they see stable, predictable cash flows in an environment where, while volatility has settled in, the world is pretty volatile right now. And how they predict how that's going to play out, surely impacts where they wanna put capital. And so digital infrastructure increasingly is attracting capital. Our businesses, as the leader in digital infrastructure and a thought leader, to many of those investors, has brought activity to our doorstep and support for our businesses globally. It's really important and something that we focus on. A great deal of my time is spent on telling the narrative, educating the investor community, broadening our product base and access to debt because the capital needs are large, but the support so far has been there for us.
Mm-hmm. And then this is real-world implications 'cause I wanna say thank you to Tom. We just finished an ABS that was very, very successful, way oversubscribed. And we were able to tighten quite considerably. And part of it while we're doing it is Tom's there helping us guide us as an advisor, which is incredibly valuable, way more important than what the banks tell us, honestly. No surprise, right? But but unique. But also, we're at the shows, but Tom and DigitalBridge are at the shows. And and part of what happened in this issuance is we have 15 first-time logos. We don't have that if we're not at ABS East and West and if you're not at ABS East and West 'cause while they're new logos, they know us. They know DigitalBridge. It's comfort. And that's what they want, that stability. And they see us every year. That, thank you.
Mm-hmm. One of the places we've been raising a lot of debt capital in particular is at Switch, which is a business that we acquired in our second flagship fund roughly 18 months ago. Geneviève, I know that you're on the board there and oversee that business day to day. Maybe give the audience some context around what we saw because it's a name that I'm sure is familiar to many of the people in the board or audience as to what we saw in the business and then what we've been doing over the last 18 months, you know, operationally and maybe, Tom, on the financing side, you know, to really try and drive returns for our fund investors.
Yeah. No, absolutely. I think Switch is, you know, the perfect case study of those three pillars. You know, Marc and Jon were just discussing.
Yeah.
Of operational expertise, customer-centric, and ultimately platform creation. So the thesis when we took private Switch, about 18 months ago is that they had a very unique and differentiated offering, a Tier 5 data centers in the United States, really serving the Fortune 1000 customers, with their Tier 5 data centers. We saw the opportunity to leverage their very large land and power bank and serve a different type of customers, the hyperscalers. And we were able to facilitate that by leveraging our relationships at DigitalBridge levels with a few of us having kind of had a relationship with those clients for, you know, the last decades or so. So that was very critical in driving some of the outperformance we've seen at that businesses over the last 18 months or so. And then we've been able, also to liberate the capital structure. So we've raised $ billions of equity behind that business.
Mm-hmm.
And then we've also, you know, have raised and will raise $ billions of debt capital markets as well, where Tom will be very important.
Yeah. We just recently closed the first securitization for that business. It was interesting because the Switch business sits really between the hyperscale that had been securitized, we did the first there with Vantage, and the enterprise data centers. We did the first with DataBank. This was a little bit of a different narrative. It's private cloud. It's large campuses but multitude of customers. And so we needed to go through a process of educating the rating agencies. Again, we partner with all of these groups, the lender community, the rating agency community, to help them to build their understanding and narrative of the business. And so in the Switch case, and Alex mentioned the conferences, there's a conference in Las Vegas. Switch's headquarters was there.
And so we took that opportunity to bring the rating agencies to the facility, tour the facility, raise their knowledge, build some excitement, meet a bunch of ABS investors, bring them to tour the facility, again, build that excitement. And that's resulted in a following for that business in the ABS community that is developing and building a successful first issuance and one that we think is gonna be a part of that financing program for the long term.
Mm-hmm. Tom, clearly one of the secular drivers of growth at Switch will be the adoption of artificial intelligence, as Mark and John just went through. Maybe, Alex, some of your perspective around what the implications of AI may be for telecom towers because I know it's something that, you know, doesn't attract the level of attention.
Yeah.
That data centers do. So interested in.
Not yet.
Perspective.
Well, you know, I hear. I talk to Raul pretty frequently. I hear the orders coming in and the demand. You know, I see Jon’s chart. I see the demand for compute, driven by generative AI. That’s all, I think, designed. It’s a race to figure out vertical to own verticals with services and data. All in my opinion, all that’s gonna end up on our phones. All that’s gonna end up in our hands. It always does, right? So I don’t know when, but I think there’s gonna be a significant uptick in wireless network traffic driven by the results of what AI becomes. In the short run, we have a demand cycle that is infill-driven for just existing apps and whatever develops for 5G only.
But I think that if you look at 2026, 2027, 2028, there's gonna be a period of sustained uplift in lease-up, which is a very important driver for our business, as these services and this data flows to mobile devices. It's inevitable. Already, 60% of ChatGPT sessions are mobile.
For Jen and Alex, you're both on the board of Highline, which is our first fund's Latin American telecom tower investment based in Brazil. Maybe some sort of overview around what we're doing there but also more broadly around how, you know, in the in the telecom tower space, Alex, how our portfolio companies cooperate and what we're doing to bring them together.
Yeah. Sure. So Highline is an investment we made, back in 2019. It was really where we identified an exceptional management team that we wanted to back, to grow from about a couple of hundred towers in Brazil to now well over 10,000 towers, which was done really by working in partnership with them to grow organically through Built-to-Suit but also through M&A by acquiring a number of platforms. And really having somebody like Alex in the boardroom who's able to kind of share knowledge and brainstorm with the management team has been incredibly, you know, value additive. And what I personally really enjoy is that this learning and brainstorming goes both ways. So the management, the local management team is taking some lessons learned or some items from the United States market but vice versa. I think you've even kind of probably brought some new ideas from Brazil to the business here, which I think is very. Absolutely. Which is very value additive.
Yeah. And I think the way I look at it is I think sort of Ben and Steven and the DigitalBridge team have given them a layer of discipline around how they function. Not always that they're that excited about it, but they're good. And I more have, like, a mentorship relationship with the CEO. We're pretty close. But we talk about, like, carrier agreements and what what's happening in the U.S., what's happening every market is different. But really, out of that experience and also being on the EdgePoint board, what we've started to do is we've just had our second annual tower summit.
DigitalBridge has a tower summit, which is, you know, we said, "Hey, we all pay money to a third party to go to these meetings to not talk about what we're really doing," right, 'cause they're our competitors. So, like, we have 11 tower companies worldwide. Why don't we do it ourselves? So we just had our second one in London in April, really, I think, very positive feedback because we all get out of it two or three really good new ideas from our peer group around the world that we would never get any other way. So, I think that's something that DigitalBridge and only DigitalBridge can do.
Excellent. I think that's it in terms of my questions for the panel. Thank you very much, everyone, for your time. And thanks, everyone, for being here today.
Thank you.
Thank you.
Thank you, Liam, Alex, Tom, Jen. So now we're gonna move into the AI section. And we're slightly behind, so I'm gonna move a little quicker. I've been told to move it along very politely. And look, at the end of the day, every customer that we do business with is involved in AI in the ecosystem. And so the networks need to evolve. And we talked about it earlier. Where do we start? Where do we go from language-based models to inference to generative AI and that journey in the arc of where data's gonna migrate to? Ultimately, at the end of the day, we, we know two things will hold up. You're gonna need more capacity, and you're gonna need faster connections, which equate to lower latency. And so these are kind of the truisms that hold up around what we're doing around AI.
So first, what did we learn in the last year? The ecosystem has exploded, probably a little faster than we all thought. Obviously, chat is super important, but it's the ecosystem around chat that fascinates me and that there are customers emerging and evolving very rapidly, very quickly that are spending money on CapEx, that are spending some of that CapEx with us, and we're taking wallet share there. While it's easy to talk about chat and OpenAI, it was much like the cloud. There was a lot happening in the cloud in the initial infancy. But really, what got us super excited around leasing and activity was the ecosystem to cloud because they were taking enterprise data center space early. They were taking access on our fiber networks. That narrative is exactly playing out in AI, which is exciting.
So the ecosystem is adapting, and it's exploding at the same time. So it's really exciting. And then along with that comes these massive language-based models. And they're growing exponentially. But guess what else is growing exponentially? CapEx. $Hundreds of millions of CapEx are being spent to build these models. And this is not a typo. And you can hear it on the cloud calls with the customers. They're telling you that they're gonna be spending $billions and $billions of CapEx. They're spending it with us, which is really exciting. And then ultimately, the amount of data and the amount of GPUs needed. NVIDIA has been a great customer of ours, Vantage, for six years. And we've grown with NVIDIA. We're now growing with CoreWeave. We're providing, you know, space, power, and cooling to CoreWeave. But we're also providing capital to CoreWeave.
And that's another example of how this ecosystem, this TAM, is growing where our ecosystem is evolving, and we're taking advantage of that. We're now going into the second CoreWeave loan, and we're providing capital to them outside of our flagship strategy, which is exactly what we hope you'll take away from today, is that there are opportunities to work with our customers in new ways as we've expanded our product offering and as we raise more capital. But the key here is the GPU space is exploding. And with other competitors to NVIDIA coming, we're having those conversations with those customers that are requiring not only megawatts of power but some of our customers are asking for gigawatts of power. That's the size and the enormity of what's happening in the AI infrastructure side. And ultimately, it's reshaping and accelerating the investment.
This, I thought, was one of the more interesting slides that we're gonna show you today. As you see CapEx down below on the right there bumping along, you know, and then all of a sudden, you see 2024 and 2025. This is not a typo. This is billions of dollars of data center CapEx coming. This is the wall of CapEx that we're all chasing right here, $72 billion-$100 billion of CapEx. You heard it from John earlier. We're gonna be once we build through these next 90 data centers, we'll be over 7 GW. But we have a pipeline of another 7 GW behind it where we can ultimately get to about 14 GW of data center capacity. So we're taking market share. We're taking wallet. But guess what? That wallet is massive. And it's big.
There's plenty of room not only for us but, but for others as well. Look, our ecosystem is really critical. The way we think about data centers is not the same way that other GPs think about data centers. Most of the other GPs have one platform in the data center space, good platforms. We think about it differently. We have 10 different investment vehicles in the data center space focused really in sort of four core swim lanes. One, edge computing, for example, where DataBank sits, where AIMS sits, where AtlasEdge sits. Two, public cloud. You heard from Vantage earlier, Scala in Latin America, one of the great businesses that we own.
Then working further up into private cloud, we talked about Switch and the importance of how interesting what Switch is doing in providing those workloads that are highly secure but really in a private cloud environment. And now this new fourth vertical, which is really AI and building AI data centers. Data centers are not one business model. It's not one business plan. We think about it in two dimensions, how to ultimately build capacity for customers that are specific to the technology they're trying to develop and deliver. And then we think about it geographically, five different continents where we're building data centers today, and we're showing up for customers. And ultimately, that manifests itself here on the left with our platforms, Vantage and Scala doing public cloud, Switch in private cloud, and then on the edge interconnection side, DataBank, AIMS, and, of course, AtlasEdge.
We do think about this ultimately as different business models, different customers with different requirements for space power and cooling and security and connectivity. The data center sector is complex. You have to understand the customers, and you have to build the right products to match what the customers want. For us, owning one data center company on a global basis makes no sense. This is about differentiation. It's about ultimately delivering for customers in a very specific way, which is why we're taking more market share, which is why we're raising more capital, and we're growing AUM at the same time, and then matching our customers with those workloads. Then the ecosystem. We just talked about the data centers. But ultimately, to deliver these AI models, like I said earlier and what Alex said earlier, most of this is gonna happen on your mobile device.
To make that happen isn't just about data centers. It's about providing the fiber. It's about providing the macro sites, the small cells, the edge infrastructure. All of this is exploding in the next seven to eight years, not just in data centers. AI is about the ecosystem and understanding data gravity and how data proliferates towards the edge and what is required to deliver that data and those solution sets for customers. That's about convergence. That's about the flywheel. That's about what we've created at DigitalBridge that's so unique and that is now powering and scaling over the next five years. The power issue, it's front and center. To set it up, it's really simple. This is easy. I'm looking at Christian right now 'cause he knows exactly what I'm talking about. This stuff is power-hungry like we've never seen before.
And ultimately, what you're seeing is these densities. You saw it in the video, 5x, 10x more density at the rack level, at the GPU level, different cooling requirements. You go back 10 years ago in the data centers. Christian had a Microsoft-powered data center, cooling from under the ground, raised floor, cooling coming up. Then we went to public cloud. We started cooling from the sides, started putting cooling equipment from the sides. Now in AI, I was at an AI data center, which I will not disclose the location 'cause I was not allowed to say it, but all the cooling was from above, liquid cooling coming down on the data center and a 1 MW workload, half the size of this stage, three racks, 1 MW right here, all being cooled, not from below, not from the sides, but from the top and through liquid cooling.
That's power density. Ultimately, customers want it. They want it now, and they want it cheaper because they're demanding more power and a smaller and tighter footprint. So what's the conundrum? Power's constrained. I feel like I'm a bit of a broken record 'cause I've been going around to conferences for the last two years evangelizing the fact that our transmission infrastructure is unfortunately not up to the task of what we need to do in terms of that 50 GW of new data center capacity that we need to deliver as an industry over the next three to four years. But fascinatingly enough, Elon Musk says it at a conference 90 days ago, and now, all of a sudden, it's a talking point. But here's the problem. The problem is that we can generate sufficient power.
We just can't transmit it efficiently and at the right cost basis and at the same time eat into some of the standards that some of our customers have signed up for in 2030 around getting to green power. So this is a real conundrum. It's multiple problems that we're trying to solve for here. And ultimately, we gotta find a solution. It's two solutions, right? One, we can bring the power to the data center, or you bring the data center to the power. Those are kind of the two ideas. And ultimately, we know that we're gonna have to probably do a little bit of both. And we also know that power is tricky. Wind and solar are not exactly the most reliable providers of power. So there's not an exact one-to-one correlation.
If I go build a 100-GW solar farm, that does not translate into 100 GW of data center capacity. You have loss. So maybe if I build 100 MW of solar, I'm getting anywhere from 35-60 MW of power that actually gets to the data center. Same thing in wind. If I bid 100 GW of wind, maybe I get 30-60 GW of wind that ends up in the data center. So we have these fluctuations, right, in wind and solar. And it's, by the way, very reliant on time of day 'cause guess what? At sunset, we lose solar. And certain parts of the day, we lose wind. And ultimately, these solutions are gonna be hybrid solutions. And look, there's no one single bullet that's gonna solve this problem. And you're gonna hear from a panel of experts in a second.
You'll hear from Alex. You'll hear from Christian. You'll hear from Jon. We've taken a very pragmatic approach. We've been at this for two years. We didn't start yesterday worrying about power. We've been busy at work on this for a long time. It's a combination. Ultimately, the type of infrastructure that we're gonna build and own and operate will be a hybrid because it's, it's a pragmatic approach to solving the problem. There's not one solution. At the same time, we're all on the clock related to some of the requirements that our customers have around getting to carbon neutral. So at the end of the day, again, we've been focused on it. We've been working on it. Switch and Scala are poster children, 100% renewable, different ways they've gone about it. But for example, Scala uses hydro, leased transmission infrastructure. We own our own substation.
We bring that power into Tamboré and Campinas, and we provide uninterrupted renewable power. And we do have an interconnection agreement back to the grid in case we do have moments where that power is not contiguous. Same approach we've taken at Switch. We've used PPAs. We've used solar. We've used wind. We've used hydro. We've used all sorts of solutions at Switch. And I give Rob Roy and the team a lot of credit. They identified this as an issue 11 years ago. And then we have our kids that are progressing, DataBank and Vantage, same thing, using a combination of PPAs, using a combination of alternative sources of energy directly to the data center. We've used LNG in one location for Vantage. And we're thinking about other forms of alternative energy, at DataBank where our data center is a little bit smaller.
Ultimately, our goal is to get to net-zero 2030. It's gonna be hard. It's gonna be hard. We're gonna need the grid because at the end of the day, renewable energy has an inconsistency to it where you have to be interconnected, and you have to be able to bring power from the grid in off-peak hours, which is great 'cause in off-peak, we can buy it at an effective rate. But the goal is we've been working at this two years, and we're progressing and more ideas to follow and more execution coming. What's the big deal? It's really simple. Most of you know that New York City spends about 5.5 GW per day. That's about the draw here in New York City. So if you think about what we're doing, you know, we're thinking about we're building 30 GW over the next five years.
So we're effectively building 5 New York cities in the next five years in terms of power demand and power consumption. It's, it's a big, big, big pull. But the good news is, we've got great people. We've got great partners, that worry about this and think about this. So with that, I'm gonna ask Severin to come on up and lead a panel with Jon Mauck, Christian Belady , and Alex Hernandez.
All right, everyone. So, hopefully, you can hear me. We've got Jon Mauck, who you've met and heard from before. Let me do a quick intro to Christian and Alex. Christian is a special advisor to DigitalBridge. He joined us from Microsoft, where he'd served for 16 years in a number of senior roles, including heading their global data center strategy. Fun fact that Mark mentioned earlier, he's coined the term PUE or power usage effectiveness that defines the industry measure of the efficiency of a data center. So really, an incredible pioneer in the data center space and focused on kind of what we're doing in technology. Alex is a senior advisor as well to DigitalBridge, focused on the convergence of energy and digital infrastructure globally.
Previously, he was the founder and CEO of Cumulus Data, the first hyperscale data center platform directly connected to carbon-free nuclear power. Cumulus Data was sold to Amazon in March of 2024, not too long ago, for over $600 million. He served previously as the CEO of Talen Energy, one of the largest competitive power companies in North America with 15 GW of power. And he's got experience also in selling a firm called Terraform Power, which is a large renewables platform, to Brookfield. So, you've been a builder of businesses and an operator of businesses in our ecosystem. So, I'm gonna start it off with, you know, Mark pointed out some of the breakthroughs that we've seen in ChatGPT and, more broadly, kind of GenAI. They're starting to get felt in the data center space. Maybe, you know, Jon, you can talk about the pipeline, give us a sense of what's happening on the ground, maybe some historical context for, you know, this explosion.
Yeah. A grand question. And it is an incredibly exciting time to be in this space. I would say of everyone in the room, I probably have the most fun right now, to be honest. So I just wanna, you know, this is a really exciting, macro opportunity. We have seen the size of this market effectively double being driven by AI. And it's impacting everything we do and every way we think about deploying infrastructure. So we talk about AI as a specific category, but it's also influencing and impacting the way we think about every engagement we have, every application, every device, every cloud, opportunity. You know, if I was to step back and say, "What do I want to want you to take away from this?" maybe the most important thing is that we are agnostic as to AI, cloud, and the growth of the digital economy.
We are providing that service, that infrastructure that everyone needs. So whether it's NVIDIA, AMD, it's Amazon, Google, Microsoft, they all need this physical layer to bring in digital-grade energy, to bring in cooling to manage that heat, the connectivity, and the physical parameters around that. And that's what we're focused on. So we are agnostic as to technology inside of it. We're also, by the way, an intermediary on the power, but we don't take power risk. We're passing that cost to you in almost every case, which I think is really interesting. And I think it gives us great alignment to the question. And we wanna solve that for our customers. But we're also, if there are spikes in power actually, that's not one we take financial risk on, which is really important.
The other macro- thematic and Marc touched on this - is we have 10 different businesses, six different logos in the data center space that we're working on. Each one is focused on the swim lane where they can deliver the most highly differentiated value. We have different businesses for very specific reasons, right? They, they find the opportunity where they can deliver the most value. They can partner with customers. We can match capital against that specific opportunity. And we say, "What is the swim lane where you can really drive value creation?" And so as opposed to having one answer for the world and for every kind of data center, that's a big part of it, which I think, to your question about how we think about where we're going, where we sit today, that's a big part of how we got here with our portfolio.
Yeah. Yeah. Christian, you and Jon mentioned earlier you were the one who had built Microsoft's first data center. What are you seeing, you know, today that's different or the same, you know, with AI and the influence that's having on development?
Well, I think Mark touched on some of it with which was density is going to be a big shift. In general, the technologies are similar. There's some changes happening, like liquid cooling, which liquid cooling has been around in the computer industry, you know, decades ago when I was still a young man. But ultimately, what we are seeing is that there's going to be a bigger need to outsource capacity. If I look at, you know, back in the days when I was running a data center strategy for Microsoft, we actually went out we realized with the cloud growing rapidly, we couldn't actually go out and build all of it ourselves. We had to actually rely on partnerships and partners such as Vantage and some of the other players.
And now with AI, this is even a steeper ramp in that no one anticipated. And it's going to be even much more important to develop the partnerships with all the companies out there for the hyperscalers, because there is no way in hell that they'll be able to scale on their own. The scale is going to be so large that it has to move from being more of a transactional kind of a relationship to truly an integrated and collaborative future as all of these players play together. And that's ultimately what attracted me to DigitalBridge is that I see the opportunity being so enormous.
How do you see that geographically playing out or by region? Is there some distinction where you say, "Hey, listen, internationally, there's a certain dynamic domestically," or, or even, you know, hyperscale down to kinda call it the metro?
I mean, I think ultimately, the most of the growth will first happen in the U.S. But ultimately, it's going to be everywhere. So whatever is done anywhere on the globe or in the U.S. will happen everywhere. So I don't really see that much difference from that perspective. I think the growth will be everywhere.
Yeah. Interesting. And, you know, when you think about what that looks like, I get a lot of questions about what does an AI data center look like differently? How is that different? Marc talked a little bit about the density of some of that. What are you looking at in terms of from a technology standpoint? How do we meet that, not just in building more but doing things more efficiently?
Yeah. Ultimately, AI data centers are going to be driving all of the technology shifts in the future. The density itself, just driving to liquid cooling, is changing the form factors, as Marc was talking about earlier, of data centers. So the density is gonna be going up. So there more exotic cooling systems are gonna be coming in. There's also going to be a lot, in terms of networking will also have to change because, it instead of hierarchical network architectures, it's going to be much more point-to-point. So there's going to be a lot of innovation in that space that's going to have to take place. And so, you know, I know there's a lot of hyperscalers that are looking at free-space optics, as well. So there's, there's really a, a, a lot going on there.
And then certainly on the power side, which I know Alex will have a lot to say about, there's going to be a lot more work in how do you actually make the data centers be in the kind of a load that could disappear, more flexibility to participate in the episodic nature of even renewables for the data centers to kinda go offline and go just on local generation, their own generation, for example. So I think a lot of innovation. You already see grid-interactive UPSs coming in place. So a lot of new technology will be helping us be much more flexible. And again, going back to the partnerships, this is why it's so important to have these partnerships because the grid and the data center ecosystem are gonna have to play together. It's no longer just, you know, "You're giving me power, and I'm taking it." You're, there's gonna be give and take across that interface, which I think is going to be a big part of the future.
Yeah. And Alex, you've been kind of at the center of helping us think about how that intersection plays out between power. You've got experience in that area. And tell us how you look at power and data centers, you know, historically, maybe today. How does that have to change?
Thank you, Severin. Delighted to be with all of you today. So, the power business is a data center business, and the data center business is a power business. These are two worlds that to date have never been connected. They're converging at a rate that I think few in the world understand until now. The reality is we're at the beginning of a new era, in my opinion, where the electric industry, as it's set up today, is ill-suited to meet this exponential demand, right? The utility monopolies that have generally adjudicated this demand have not seen the signal coming, are not set up to invest, have not made the investments.
And the constraint to all of this growth by the largest 10 market-cap companies in the world is going to be, "How do you connect to power?" I think our answer here is that it's going to be a rearchitecture of the power industry where data is going to go where low-carbon, low-cost, reliable energy is. And that energy is gonna be transported via fiber, right? That is not how the world is set up today. I think about this as a little bit of a Rockefeller moment. You know, for those of you that know history of power, the first power plant in the U.S. was built steps away from where we are here on Pearl Street. You may remember power moved to Niagara, you know, later on.
It led to a fundamental rearchitecture of the way that the power industry works. My view is we're at that moment now driven by the forces, Christian, that you mentioned, which is increasing innovation around GPUs and AI, increasing power density at the chip level, at the cabinet level, at the data center level, increasing scale at a scale that we've not seen to date. You can't solve it with the solution today. So imagine a new map. I think all of the platforms that you talked about, Jon.
Yeah.
Are at the center of that rearchitecture, which is just an exciting place to be. This conversation is so interesting because as we think about this from outside in, holistically, the question is, how do we take insight from AI and the demand requirements and what that means to support the growth of compute and the digitization of every economic process all the way through the infrastructure, the power generation side, right? And it's that holistic perspective, which I think is a great differentiator, not just today, but thinking about, as you said, how we change the way the landscape looks. What's the plan for the next 10 years? And to us, this is an incredibly exciting sort of, inflection point but discussion that we're having on a daily basis.
With huge opportunity.
Huge.
You talked about platforms and business building. And I think part of the differentiation of all the platforms you've talked about, it's going to require an industrial solution. You can't fix it with capital structure. You can't fix it with leverage. You can't fix it. You have to fix it industrially. And I think our belief here is that that industrial solution driven by all the ecosystem that we talked about earlier is actually going to enable the growth, going to enable the scale, and at the same time, to the extent one can, solve the power issue creatively and industrially. In my opinion, that's a tremendous source of alpha for the investment community. It's also an enormous source of value for our customers that we serve. To the extent we can do those together, again, at the industrial level, not at the financial level, you know, that's how you solve this big problem.
So, one of the questions we get around the kind of we see the demand coming, but what are the financial implications, John, when it comes to that in terms of how it's impacted development yields just from an investment standpoint, how we look at that as it changed in different verticals, whether you're at a hyperscale or edge or, you know, what, what's happening to development yields?
Yeah. It's a great question, right? I mean, we are excited to be aligned with this fundamental opportunity, but we're also in the business of deploying capital smartly, right? And so, as we think about it, at each company, as we look at the opportunities to actually develop data center capacity, we're being very selective to make sure we actually understand where we're building, what we're building for, right, the connectivity and the long-term strategic planning around that. We're not just taking every data center deal that comes in the door, right? We're trying to really curate that list because of the current supply-demand dynamic. It has resulted in yields generally going up. We've seen constraint on new capacity in many markets around the world today.
We talked about some in the video, like Northern Virginia, for example, but others, Amsterdam, Singapore, Dublin, where if you have a data center in place, at renewal, you can expect to see the average pricing per kW go up materially in some places. On the supply chain side, we talked about it earlier, we're trying to have insight into the supply chain so we can actually understand the cost. As a result of all that, we've seen a very attractive backdrop. And we've seen yields increase despite the cost of capital this past year, despite the volatility. And so, fundamentally, we think this is a very strong position in terms of the opportunity. As we deploy capital, we're being very smart about making sure it's the highest and best dollar we can deploy, not only from a return but long-term partnership, right? How are we a good partner as we think about this transformation in the economy?
Yeah. That's great. And, and that jumps to, you know, we talked a little bit about power. One of the aspects of that that we've covered as well is this idea of renewables and how that factors in. Maybe, Alex, you can talk a little bit about that and Christian as well, maybe that perspective from one of the large hyperscalers thinking about renewable. How does that get integrated? How do you solve that?
Yeah. Well, thanks, Severin. Renewables is an important part of the solution. But I say the customer and we are trying to solve what we call the energy trilemma, which is you have to find power that is low-cost, that is low-carbon, and that is reliable. Finding two of the three is easy. Doing three of the three is very difficult. And so renewables absolutely will play a big part of the solution. But the reality is we can only cover with renewables roughly half the day, and maybe a little bit more when you incorporate batteries. And you still need the grid to do that, right? But clearly, given the growth of renewables, that will be an important part of the solution, especially as renewable campuses grow very largely. But we've gotta take an all-the-above strategy.
Natural gas has to play a part, as a stabilizing fuel that can get us through the 24 hours. Carbon-free nuclear has to play a part. There's 94 operating nuclear reactors today in the United States. To solve the scale, when you start talking about 54 GW of capacity, which is a number, I think, on one of Marc's slides, that's roughly one-third of the load in PJM that exists, right? So you're gonna have to make use of every source, not just one source, to get there, to meet this challenge.
I think it goes back to the key point Christian earlier. That also means working with the customer to understand what their loads are so we can actually start being more intelligent about what we're bringing to data centers, where we put them, and what the requirements are. It's gotta be a holistic solution.
Yeah. And that's the work that's being done there. It has to be coming from both sides, which goes back to this whole notion of really intimate collaboration. And again, certainly, it's this the scale that we have that we can now work with all these different players, not just as a one-off kind of collaboration but really this integrated view across all the platforms.
Yeah. Interesting. So, Jon, question for you. We've got six data center platforms on a global basis. How do you think about, you know, kind of the implications of AI?
Yeah.
Across those different spaces? Some of them are geographic in nature. Some of them are, you know, kind of customer-specific.
Yeah.
As opposed to big versus small. How do we think about building this kind of?
Yeah. Well, so again, as Christian said, the strategy is really starting in North America but going global. So we see the same opportunity on a global basis, every region of the world. So from that standpoint, we think it's gonna be continued to take the playbook and apply it. As we think about the different swim lanes or different strategies, again, edge, the creation or non-zone where we actually generate the algorithms, right, or AI data centers, the cloud availability zones, which we've talked about for 10 years now where you connect to the cloud, these are all part of a broader ecosystem, right? And again, none of these exist in a vacuum. A data center is a data center because of the content inside and the connected footprint to another data center or to end users or to where models generated.
So all of this has to be thought of as a topology, or an ecosystem where we actually support what happens from a compute or the digital economy. So from that standpoint, there's a lot of collaboration across the portfolio today, whether it be from the cloud footprint to the distributed compute footprints to the private cloud, where there may be similar conversations, but they actually can work together to really be complementary companies, together with the fiber business, which goes back to the point made earlier. If we take compute to where power is generated, what's important is to understand the fiber topology to get back to where it's gonna be used. And so as we think about that trade-off, again, Zayo and their fiber businesses, for example, are part of that solution. It all goes together.
We're starting to see, actually, the emergence of some new players kind of in the AI cloud space. You know, Dean and his team on the credit side provided some backing to CoreWeave, late last year. What's your sense of, you know, I know they're customers of Switch, and of DataBank as well, you know, this rise of kind of the specialized AI cloud provider. You know, is that, you know, something that you see accelerating?
Well, without talking about any company-specific.
Yeah.
I think there is significant demand for AI as a service where you're seeing certain applications being created and hosted. The GPU model is very significant from an investment standpoint. And to the extent you can aggregate that cost and share it over many customer opportunities, it makes a lot of sense. So we see real opportunities to support those companies as they grow. And again, being agnostic as to the technology and to who provides that technology, it puts it in a very attractive footprint to benefit from all that growth in AI or growth in cloud and digital compute.
Terrific. Last question for Alex in terms of some of the opportunities you see ahead, right? Like, if you look forward and say, "Okay. We've got this issue. We're dealing with it. What do we have to do? What do we need to accomplish to kind of solve that, what you started off talking about, you know, intersection of the data centers, the power, the power's the data center?
It's interesting. I think innovation, and growth is gonna continue, in my opinion, unequivocally, right? And so what's required is you've started to see a little bit of that convergence financially by the valuation multiples of, the electric world, whether that's, the merchant, competitive power producers, utilities, etc., as people begin to realize that these worlds are, in fact, colliding, and converging very rapidly. What's needed now is a little bit of industrial ingenuity, right, of actually executing it because there's a lot of, discussion about how to do it. But you actually need to, invest capital, develop, begin to, put that solution in place so that it's in place, you know, as Marc said, two-four years ago when that wave of demand comes in, right? So what's required, in my opinion, is, is action.
There's been a lot of words said, and action at the industrial level, to make that solution possible and actually connect many places in the U.S. that, by the way, have excess power but don't have data. And I think that's where we go next. I think it's important just to say that we see the, you know, all of these sources of power, right, as a partner we'll bring into that dialogue. It's a solution that we create with the customer who has the compute. We can manage the infrastructure. We can bring power into that. And so, again, I think it's the partnerships on the power side, partnerships on the customer side, I think, that lets us be in the middle here to really create the value.
Yeah. Terrific. Well, Christian, maybe one last question for you just in terms of, you know, beyond partnerships. I know you participated kind of in one of our operating partner panel discussions or meetings where we got together. What do you have any kind of takeaways from that experience in terms of opportunities or?
Oh, that's a great question. So, opportunities, certainly, I think the thing we've already talked about, partnerships.
Yeah.
But I do believe there needs to be much more investment, longer-term investment, in just technologies. One of the groups I led was an R&D group where, you know, the real frustration is there's no real commitment to invest out into the future, even some of the, you know, Alex and I were talking about this, is we know that we need certain things in the future.
Yeah.
But if there's a 10-year runway, and we're not investing in it today, and we'll invest in the last minute. And I think the real opportunity is to really look more long-term. And one of the struggles that the hyperscalers have is, you know, they are quarterly driven. And you know, I've talked to John about this too. It's you need more patient kind of a timeline to really invest for that future.
Yeah. Listen, I think one of the silver linings today is that you now have a lot of really smart people at some of these global hyperscalers focused on this issue, right, that maybe weren't five, 10 years ago.
A DigitalBridge.
And a DigitalBridge.
Yeah. That's exactly right.
No.
That's why I'm here.
Working together. Yeah. Good. We'll, we'll end on that and thank the panel for their participation.
Thank you, guys.
Really appreciate it.
It's great to be partners.
Yeah. Thanks.
Thank you.
Thanks.
Yeah. Thanks .
Our new CFO, why don't you come on up?
Is there a clicker?
Well, you've got the clicker.
Okay. Thanks, Severin. And I just wanna thank Marc, and Ben, the rest of the management team and our board for giving me the opportunity to be here today and continue the great work that Jacky Wu has done over the last four years. Jacky and I talk just about every day, and he's been super helpful to me in my transition. I've been in the seat, as a CFO for a little bit less than two months now, and I, I couldn't be more excited about the opportunity that we have ahead of us. I'm gonna talk about the financial side of our business. I'm not as smart as some of the other people who can explain edge computing or how many megawatts it takes to run a data center. So I'm gonna keep it really simple. You know, we have strong revenue growth.
We've got a very simple financial model, and we have clear priorities for how we allocate our capital. Before I do that, I, I do get a lot of questions about my background and, you know, why I chose to join DigitalBridge. So I figured I'd, I'd touch on those really quickly. I started my career in public accounting, but I've spent the last 25 years in the alternatives industry, majority of that at the Carlyle Group. And then, I spent about five years, before DigitalBridge as the CFO and Chief Operating Officer at a smaller, diversified alternatives manager. Although when I, when I joined Carlyle in 2000, we didn't call it alternatives. They called firms like Blackstone and KKR and Carlyle buyout firms 'cause that's really kind of all, all people did.
But I was fortunate to join at a real inflection point as these firms started to diversify geographically and expand the asset classes that they were involved in. A number of the firms went public and have become truly global investment firms. So I had the opportunity to work across just about every asset class within the alternative space from real estate to buyouts, infrastructure, hedge funds, permanent capital vehicles, and everything in between. And over that time, seeing the life cycle of funds from, you know, an idea on a whiteboard to a launch to monetizations and kinda launching of successor funds two and three across the way. So, you know, I to steal a phrase from the technology industry, I've been a part of the hyperscale growth in the alternative space.
I'm not even sure how good the data was, you know, when I started, but I think the industry was probably around $1 trillion. Now, I think one of the other slides said $16 trillion, and I'm sure we'll be headed towards $20 trillion pretty soon. So, you know, it's been a really interesting opportunity for me to learn, you know, what it takes to grow an investment firm over a long period of time. You know, so why DigitalBridge? So you've heard about the secular tailwinds. You know, like, investing is hard. Raising capital is hard. And generating premium returns for our investors is hard. So it's always good to have a little bit of wind at your back.
You know, that said, I've also, you know, been around long enough to see what it takes to be successful over a long period of time, not just, you know, when the current's flowing in your direction. You have to be an expert at something. You have to have a differentiated value that you deliver to your customers. And I do think about the LPs in our funds as our customers. You know, for any business, you have to give your customers something that's unique that they can't get somewhere else. And I think we absolutely provide that to our investors and our funds. You know, we provide them with compelling investment opportunities that are differentiated that, you know, they can't easily replace in their portfolios. The team. You know, look, this is a people business.
So, you know, when I thought about, you know, joining the team was super important to me. Marc's a visionary and a force of nature and, you know, the kind of person you wanna be aligned with. We also have a really strong and deep management team. I probably use sports analogies a little bit too much, but, you know, they say quarterback is usually the most important position in any in all sports. But if you have a team, a football team of all quarterbacks, you're not gonna win a lot of games. But I think we've got a fantastic management team that has a lot of complementary skill sets and is gonna help us win a lot of games. You know, and lastly, the ability to add value. You always wanna be somewhere where you can make a real contribution.
I think I can do that here at DigitalBridge. I think I can help Marc and the rest of the team continue to grow and scale the business and institutionalize it without squashing the entrepreneurial spirit you need in this business. You know, a lot of times, in this business, success is about being creative and, as Marc likes to say, thinking around the corner. And, I think I can help the firm grow, institutionalize without sacrificing that. So enough about me. So our historical financials. You know, as we've pivoted the business to a pure-play asset manager, our fee-earning assets have grown, almost three times over the last four years. And, in that time, our fee revenue has grown more than three times, almost four times.
As we've done that, we've diversified the asset base, notably with the launch of the credit business and the acquisition of InfraBridge. And that's reduced our reliance on the separately capitalized portfolio companies, on which we earn fees but not a carry. It's also resulted in our fee-related earnings growing consistently over the last couple of years. So look, our business has historically been very complicated. You know, the team has done an amazing job pivoting, as Marc talked about in the opening, from a quite complex business to one that really now is quite simple. You know, we raise assets from investors. We typically earn a long-term contracted fee on those assets. We also earn a carry, but right now, just focus on the fees. Our average is around 90 basis points. Some of our fund products are higher than that.
Some of the co-investments are a little bit lower than that. But typically, we average out to about 90 basis points. You know, so you'll see, 2022, we had $20 billion of on average over the course of the year, $20 billion of FEEUM and generated $176 million of fee revenue. And that kind of rate has held, you know, steady throughout the last few years. We've also realized the benefits of operating leverage as we scaled. Our FRE has grown faster than revenue growth the last few years, and we forecast that to continue this year. You know, so how do we think about the future beyond this year? As mentioned, I spent 18 years at Carlyle. While I was there, we doubled in size about every five years. Some periods, it was a little bit more than that.
Some periods, a little bit less than that. But I see the same opportunity here. So we think we can double the business over the next five years. You've heard about the data center opportunities. Kevin talked about the new fundraising channels. You know, we don't think we have to do anything completely outside of our skill set to do that. We don't need to become an insurance company. We think that scaling our existing strategies, launching adjacent strategies that capitalize on our core competencies, expanding the fundraising channels, and then, you know, on the margins, to the extent there's some strategic JVs or potentially M&A, as well. You know, so going back to the financial model, if we're able to be at $60 billion-$70 billion of fee-earning equity, you know, that comfortably generates $500 million-$600 million a year of revenue.
As far as margins, on the first quarter earnings call, I think I mentioned that at Q1 2023, we were at an LTM margin of 21%. By the end of 2023, we were at a margin of 31%. And as we continue to scale, we should be able to bring those into the mid-40s. So when we step back and we think about the firm, we think about three areas of value. There's fee revenues, which I just talked about. There's our balance sheet capital. And there's carried interest. We have a strong balance sheet, and we continue to delever over time. As of March 31st, we had $372 million of debt. We completed the exchange of our 2025 notes in Q2. So now, we have $300 million of debt at an interest rate below 4%, in addition to our preferreds, which I'll talk about in a minute.
On the asset side, we've got almost $1.4 billion invested alongside our investors and our funds, which we think is a really compelling asset. We've got over $100 million of cash and undrawn revolver. So carried interest. This is a really significant part of our business model. It's really important to our LPs. They find it to be a great alignment of interests. Our employees value it. But it's often ascribed, you know, limited value by the public markets. You know, in fairness, we're probably in the early innings of carry generation at DigitalBridge. But we think it's a potential source of significant upside for the firm. And just to make sure that everyone understands how we think about it and why we think there's so much value there, I wanna walk through a really simple, kind of analysis.
So in the DBP strategy, so this is just our DBP one, two, and three funds and co-investments of associated assets. We have $27 billion of capital. That includes sort of the projected fundraising on DBP three. So if we double that, which is generally what we target, that generates $27 billion of profit. The average carry rate on all this capital is 18%. And the firm's share of that carry is 27%. So some of our older funds have a lower carry rate to the firm. Some of the newer firm's funds have a higher percentage to the firm. But on average, the firm gets 27% of that. So that's $1.3 billion of value to the firm over, you know, over time. You know, lastly, I'm gonna talk a little bit about our capital allocation priorities.
You know, there's sort of two buckets to capital allocation, you know, one of which is structural. You know, in this industry, we invest typically 2%-3% alongside our investors in the funds. So that's a requirement, but it's also something we find very attractive. Historically, since 2020, we've invested about $1 billion in the assets that we manage. Then we have discretionary capital opportunities. So historically, that's been capital structure, the balance sheet, some of the stuff Marc talked about, deleveraging. We also have the opportunity to pursue M&A opportunities. And then to a lesser extent, we've opportunistically done share repurchases. And we have a small dividend. You know, going forward, those four buckets really are still how we think about it, although, you know, investing along asset LPs, we think, is really attractive.
We can compound capital in the mid- to high-teens. And, you know, we just think that's a good use of our capital. Capital structure optimization. We've done a lot of the hard work. We still have the prefs outstanding. We don't find the interest rate on those to be particularly expensive, but, you know, from a gross quantum, we would like to bring that down over time. We also see a number of opportunities on the M&A front. You know, for us to look at M&A, it's gotta be accretive. It's gotta have a strong return on investment, you know, mid- to high-teens. And we also are gonna look at whether I think Marc talked a little bit about buying versus building. You know, we always look at that.
Is it better to buy, or is it better to build something? You know, and lastly, the share repurchases and dividends. You know, we're a growth company. We find a lot of compelling opportunities to deploy capital. So our share repurchases would typically be more opportunistic than programmatic. So I probably went through that a little fast, but I tried to keep it simple. Strong revenue growth, simple financial model, and clear priorities on capital allocation. I also mentioned it's a people business. And so, my partner, Francisco Sorrentino, who's our Chief People Officer, is gonna talk now a little bit about our people and how we're gonna manage this.
Thank you, Tom.
Thank you.
Yes. This is it? Yeah. Good afternoon, everyone. My name is Francisco Sorrentino. I'm the Chief People Officer at DigitalBridge. Great to be here with you today. What I'd like to do is to share a little bit about the work we're doing behind the scenes to support all this growth and scale story. Before getting into that, I'd like to share a little bit about me as a way of intro. I joined DigitalBridge a year ago. I was working at SoftBank as a CHRO and also an operating partner leading our human capital practice that I created supporting more than 400+ portfolio companies. Before SoftBank, I was working at Microsoft, IBM, AIG, and Merck. But I would say more importantly than where you work is when
I think I had the opportunity to work in all these firms at a very pivotal time of the organization when there was a lot of transformation, a lot of change, which I think relates to my story that I started a year ago with DigitalBridge. Obviously, it's a great firm, great momentum, an amazing team. Many things that Tom mentioned are also my drivers for being in the firm. But I think the moment of a firm facing the incredible opportunity that we have ahead, building scale, growing the company, and being part of the journey was incredibly appealing to me. So, that's why I'm here.
So let's talk a little bit about what it is that we're doing to scale the firm behind the scenes, because obviously, fundraising and investing, but how we prepare the planning of the organization to scale in an efficient and sustainable way. So the first thing that I wanna talk about three areas of work today. Basically, I wanna focus on organizational performance and scale, which is basically all the work that we need to do to prepare the organization to function in the best possible way, thinking about the people, the roles, the functionality of the firm, the processes, the technology that we need, and obviously, all the processes that align with driving a high-performance culture in the organization, which is the second bucket. The culture and the employee experience are something that I think we have in relatively good shape in the firm.
We have a great culture, high performance, I would say. We have an employee experience that has been evolving over the last 12 months. But as we think of scaling, and gaining scale and growing and being in multiple places at the same time, the question is how you sustain the employee experience, how you sustain the culture, how you make it consistent, how you make it cohesive, how you maintain its power. So that's the second bucket of work that we're very focused on. And the third one is, well, I think we're doing amazing work in the value creation space with the companies. But over the last year, we have built really strong capability on the HR side, building capabilities like talent acquisition, compensation, organizational design, talent management.
So the question is how we can put these capabilities to the service of our due diligence, in investment assessment and obviously the value creation piece, working with the portfolio companies on areas like hiring for C-suite roles, helping them turn the organizations into more efficient machine, and obviously, to resolve complex compensation issues, for example. So when you think about scaling the organization, the first thing that you need to account for is fit for purpose. It's like, what organization is trying to do? So starting for what are the plans for growth for the organization? What do we wanna go in the next 10, 10 years? What is that we're trying to build? So we're thinking about what is the right setup for us, thinking about areas like capital formation. Kevin was mentioning that we're scaling up the team.
The question is how we plan for what type of capabilities and what capacity we need to really be efficient in, in an area like capital formation. We brought in capabilities, like technology that we didn't have. And the question is, what type of process are we gonna face in the next 10 years and design around that in order to be able to build efficiently and decisively? And when you think about organizational design, then you think about processes, the next step. So we're looking into every core process that we have in the organization in order to make sure that we understand how we can make them more efficient and more effective. And the idea is to introduce as much automation and technology as possible.
And that's why we have Steve Stryker that has joined, and he's been hiring an incredible team in order to think about how we can trade all this manual work for automation and technology. Now, in order to work around processes and bring in the right technology, we need the people and the capabilities to do that. So over the last year, we've been acquiring this talent from the market with the idea of gaining a point of view on what good looks like, bringing in best practices, bringing in the people that is helping us understand how we need to build the planning of this organization to make it sustainable and scalable going forward.
The idea is that this requires investment, and this investment comes in the way of, obviously, adding people to the team with the idea to maybe reducing in the future the workforce required to do that. In the short term, in order to acquire this talent in a highly competitive environment, what we need to do is to really think about our compensation practice, for example, is something that we went out there and made sure that our practices in compensation and overall rewards were competitive. So we had to invest a little bit there because we are actually competing for talent in a very competitive market. And certainly, right now, we're being very successful in the market. We don't have to overpay for talent. But certainly, we cannot underpay either.
So the idea was to invest in compensation in selective areas, capital formation, investment management, technology in order to be able to bring in this talent to the organization that we need. Now, the second thing that we need to do in addition to pay well is to make sure that we bring the right talent because there's a lot of amazing talent out there. Not all of that talent is right for us because at the end of the day, we are not there with other firms that are more mature, more developed. We are a firm that we require a lot of work. We are actually evolving, scaling. We are building out the firm. So what we need to do is to bring the people into the organization that helps us with that construction process.
We need people that want to see this as an opportunity to learn, to grow, to develop. So the intersection between providing good compensation, good conditions, and giving them a project that they're really believe in is very important because, again, we need help to build the firm for the next 10 years. Maybe in five, 10 years, we're gonna be a shop that is fully developed, very mature, and we're gonna need a different type of talent. But right now, that's the talent we need. Now, this is super important because the success rate we've had in the market in terms of hiring has been very high. The attrition levels are very low. So the people are landing very well in the organization, and that's basically help us gain traction and also save money and time by not having to deal with a lot of attrition.
Now, in terms of when you think about scale and we think about the culture, we think about the governance, one of the things that we're looking into is today we can handle the organization because I think it's a manageable size. As you grow, you need to think about how you can be in all the places at the right time. So when you think about your employee experience, when you think about your culture, when you think about your governance, the execution, the consistency in execution, the relationship with the LPs, the relationship with, you know, regulation, how you ensure that you are operating consistently across the board, well, you can do that through your leaders, through your managers, that those are your channels.
So the idea is that we're investing in a very thorough process to train our leaders and managers in order to make sure that they become our channels and we can deliver on all these things consistently across the board. Without a very strong set of managers and leadership, it's very hard to scale. So that's gonna be another focus area for us. So anyways, just to give you, again, the highlights. One, we're investing. Without investing in people, in technology, we can't really scale. And that's what we're doing and what we've been doing in the last 12 months, and we're gonna continue doing so selectively in areas like technology, capital formation, investment management, but we have to invest. We need to continue setting up a very high standard for what is performance in the organization.
So we've been working around replanning all of our performance management approach to ensure that we have a consistent bar for what is performance, very consistent performance standards across the organization, and to really set up a high-performance environment, which is what people really joining the organization from reputable firms expect to find. And last but not least, we want to really leverage our capabilities to support the portfolio. We really believe that there's a new gear that we can find in our value creation approach, by leveraging people HR capabilities in the support of due diligence and value creation work going forward. So with that, I will it was a bit fast, but I will turn it over to you, Marc.
So let's just frame the last 20-30 minutes we'll spend together. I'm gonna ask my partner, Ben Jenkins, to come on up and co-chair Fireside Chat, which we entitle Around the World. We're gonna get you exposure to our three big markets outside of the U.S. and Canada and just share some thoughts about what we're seeing in Asia, in Europe, and in Latin America. So Bernardo Vargas, come on up, please, from who runs LATAM for us, Matt Evans, who runs Europe, and Justin Chang, who runs Asia. We'll go through this panel. We've got a short video about other construction and other things we're doing around the world. I'll give some closing remarks, little chance for Q&A, and then we'll go to have some drinks where we can all interact together.
So, for me, this is a lot of fun because I get the opportunity to travel and spend time in these three regions with our three leaders in these geographies. And maybe, just thinking for a second, Ben, around what's happening in the world. And you, as the CIO, maybe you can frame the discussion a little bit.
Sure. Well, as you've heard today, we are a global firm. We're engaged in a global business, and it's critical that we be able to deliver the firm wherever we are in the world. So that includes fundraising, as you've heard. It includes dealmaking. It includes construction and development. And these three gentlemen to my left are on the front lines of that. And I think, maybe, Justin, just since you're immediately to my left, you can talk about what you're seeing in Asia because that's probably the newest region and arguably today, the highest growth for us.
Thanks, Ben. Look, thank you for joining us today. Look, Asia-Pacific for us is our newest market. It's also our fastest-growing market. And I think what's really exciting about it is all of these trends that we talked about today are still on the come in Asia, right? So Asia-Pacific, generally speaking, three, four, five years behind the U.S. and Europe in terms of digital infrastructures and asset class, in terms of sale leasebacks, outsourcing, asset sales, things like that. Most of the digital infrastructure assets and businesses across towers, data centers, fiber, edge infrastructure is still owned by the legacy owners, right? So it's the legacy telecom carriers. It's the legacy tech conglomerates, the big Japanese and Korean trading houses, big family business groups. All that's gonna change over the next three, four, five years, and we're beginning to see that.
I think sale leasebacks, outsourcing, carve-outs, spin-outs, all that is beginning to happen. What these counterparties care about the most, value matters and capital matters, but what they really want is a partner they can trust, right, 'cause they're looking at us to own and manage their mission-critical network infrastructure, and they're looking for somebody that actually knows what they're doing. What's really attractive for Asia for us is we can take what we've done in the U.S. and Europe and bring it to Asia, right? That pattern recognition that we've accomplished in other markets, and we, when we port it to Asia and the conversations we have with these counterparties, it's a very different conversation, right, at least to proprietary transactions. Frankly, it's less competitive. The Asian macro backdrop is more benign, fundamentally higher GDP growth, more moderate inflation.
Interest rate rises have been more muted, domestic financing very much available. So you have a combination of pretty benign macro, high growth, and three, four, five years behind the U.S. and Europe. So, we're, we're pretty excited about the region for, for what we do, and I think the next three, four, five years , you'll really see some of that come to fruition.
Great. Thank you. And Bernardo, you and I get the pleasure of traveling to Latin America frequently. Tell us a little bit about what you're seeing and what you're excited about in that region.
Well, thank you, Ben, and I'm very excited to be here. I think the segue to Justin's comments is very much in Latin America because we're way behind the developed nations in the world in terms of digital divide. I think that the digital penetration in Latin America is only in the 70s% maybe, whereas in Europe, Western Europe or the US, it's over the 90s%. If you look at internet penetration, it's a little bit higher but still way behind other trends. So that is, I think, very important for opportunities going forward. You know, I don't come, you know, Ben and Marc, when I came into the firm, I had never worked in North America. I have 30 years of experience in the business in the region, you know.
Falo Portugués, hablo Español [Foreign language]. I can so I know what goes on there, what the trends are happening. And I think that, as Justin pointed out, the opportunities that we have for growth on the digital space are huge. There's, we, we've already been doing things there as have been described by my previous partners, but there's still a lot to do.
Great. And, and Matt, this was before your time, but in one of our first meetings, Marc and I met with a consultant who was absolutely convinced that we could never be successful in Europe. It was too penetrated. We had nothing to offer. And today, that's obviously our largest market outside of the United States. And you and the team deserve great credit for that. But I think, as Justin and Bernardo have alluded to, our DigitalBridge model does translate across oceans and across borders. And maybe you can talk a little bit about that.
Yeah. Look, I mean, I think our model translates incredibly well into Europe. And it's particularly the case because the European digital infrastructure sector tends to only lag the US by about two years. I think one of the big differences, though, that we do see in Europe, right, is that because it's a bit more country by country, we don't have that federalization that we have, that you have here in the US, is it tends to create larger in-country opportunities. So where you might need to build in the data center space 200 GW or 300 GW campuses, we'll see multiple opportunities to build, say, 50 MW or 100 MW in-country.
We've seen a lot of that come through in some of our Vantage platforms, for example, and the way that that platform has been able to take up some of the non-FLAP- D demand that we've seen spill over into markets like Berlin and Zurich, as Europe has really followed this sort of path of availability zones coming to almost every market you can think of.
And to that point, Matt, maybe I could just drill a little bit further. What are some of the things, as we move into our third strategy on flagship, what does your team really like right now across buying and building as you think about the next three to four years of investing in Europe?
Yeah. Great question, Marc.
And infrastructure.
So if I look at sort of everything that we do around the globe and particularly look at the ecosystem across the US, where we are in Europe is it's really that hybrid cloud space, which is on the precipice of, you know, huge demand coming. I don't think we're gonna see a great deal of AI training in Europe. And if we are, it's probably Finland and Norway. But that opportunity to find the right platform and this is very much a build opportunity, right? This is very much a how do we find the right management team and put the capital behind them to create the equivalent for Switch in Europe because we know those workloads are gonna be demanded, right, and particularly demanded on the public sector side, I suspect, in European markets, perhaps in some contrast to the US. And we've seen a little bit of that in our Vantage platform already, like a lot of the workloads that we run out of Cardiff, right, of that sort of nature.
The U.K. government, yeah.
Yeah.
Interesting. And on the buy side, where do you think we are in the cycle in Europe in terms of buying platforms?
Look, I think there's still.
Any sectors you prefer over others?
Yeah. I mean, there's definitely still a big gap between sort of buyer and seller expectations, but I think, you know, fiber to the home presents a big opportunity. Europe is only about 60% penetrated at this point. We've always had a very good experience in the U.K. with our NetOmnia platform. And looking to translate some of those learnings into other markets, particularly across Southern Europe, will be a lulu. I think, you know, France has basically done. Germany is incredibly hard, and a lot of people have lost money in that market. But we're tracking, you know, a good dozen opportunities across fiber to the home in Europe today, specifically for DBP3.
Bernardo, bring that to LATAM for a second in terms of you talked about lower penetration, the lower 70s. Matt's talking about penetration in the 60s. In this strategy, where do you get excited? One to two investments probably in this strategy in your region. Where would you go? Buy versus build? Do you like the fiber space? Do you like towers? Where do you see the progression?
Yeah. A lot of a lot of the conversations that we've seen about data sovereignty, about the needs for new players to be present there in a region that's gonna have a lot of growth, is interesting for all our platforms. I think that if you talk to people that are in the towers business and you see the penetration needs there, you are excited about that. So there's still opportunities to be exploited there. If you talk about fiber, there's a lot of, you know, the numbers that Matt just mentioned are even lower there, so and the importance of having fiber not only attached to to towers but to data centers. And of course, data center growth still has a lot to grow. There's a region with high urbanization percentages, high education levels amongst emerging markets.
So that's also very ripe for investors to look at that region. So altogether, I think that's very interesting. And, you know, going back to the initial to the start of this of this conversation today, talking about new logos coming in to invest, I think that the 100-1,000 number that Kevin pointed out to this, this afternoon is exactly other opportunities to be attacked in Latin America.
You guys just came off the road.
Yeah. Yeah.
Yeah. You guys were just fundraising down there. We just converted our first.
Yeah. We did.
Local account. It came through a co-investment into our Mundo Pacifico platform.
Yeah.
That shows, again, the power of our model where we can access new investors through direct investments. Now we're talking to them about a potential fund commitment.
Absolutely. They, they love that our business is countercyclical. They love that our business is specialized, which is a change from a year ago. And they love the fact that we're global as well and that what we learn in other regions, we bring to that region.
And Justin, same thing, pivot, pivot into your neck of the woods. You know, just a little bit on fundraising 'cause I just got done fundraising with you in Asia. What's been the sea change there? What, what do you see is happening in LPs' minds? Why, why us? Why now? And why are we excited about Asia from a fundraising perspective?
Look, I, I think the Asian institutional LP base is a huge opportunity and has the potential over time to be maybe our largest our largest region, right? The Asian institutional capital tends to be followers. So they're not investors in first-time or even second-time funds. And a lot of the capital there's a ton of capital in Japan, Korea, Australia, just to name three markets, massive, trillions of dollars of private capital. And they tend to be followers. But when they make a decision and move, they move aggressively. They move at scale, and they're very loyal and sticky customers/investors. So we're just starting to penetrate that, right? So first fund, second fund. With this third fund, we're getting a lot of interest among the Japanese investor base, the Korean investor base, and the Aussie super funds. So that's a big opportunity for us.
The second thing that makes us more attractive to them is now we're in the region, right? They're investing in us because we're a global investor. They also like the fact that we're active in their local markets. So now that we have a big business in Asia-Pac, we've got people on the ground in all the markets I mentioned. That local connectivity makes a big difference. So the investment side and the capital formation side kind of goes hand in hand. And I think, again, for the capital formation side, Asia has the potential to become a much bigger part of what we do. And I think that's all in front of us, Marc.
Just sort of batting cleanup, what do you like right now in your region? Buy, build? What sectors are interesting to you?
Look, there's still a lot to do in towers, both buy and build. So we're looking at a couple towers opportunities in the region, buy and build. Data centers too, both on the hyperscale side and edge data centers. So I would say yes and yes. Buy and build, towers, hyperscale, edge. That's kinda where we're focused.
Matt touched on data sovereignty in Europe, and so did Bernardo. Where are you in your region in terms of data sovereignty, and where are those discussions with the big government agencies?
It's a big issue and a big opportunity, right? The more balkanized the markets, the more opportunity there is for us. And Europe's a great example of that. And there's some of that in Asia-Pacific too, right? The big hyperscale companies can play across markets. But as you get into AI, you get into inference, you get into really sensitive data, and eventually private cloud, Australia's gonna want its data in a business in Australia. Japan's gonna want its data in a business in Japan, right? So you need to have the right local partners, the right platforms, the right management teams in each of these markets. And these are big markets: Australia, Japan, Korea, Southeast Asia, led by Singapore. These are very significant-scale markets. So over time, having different data center platforms in many of these markets creates a ton of opportunity for us.
Let me just point out.
That's what's coming.
Oh, sorry.
Please.
Two things that I didn't mention, but that piggyback onto what Justin is saying. One is the fact that energy is such an important part of this business. We've spoken about that all day. The energy sources in Latin America are very clean, very green, mostly hydro, but a lot of opportunity there as well. Then the other trend that picks up the trends that Justin mentions in Asia is nearshoring. Latin America potentially would be the best region in the world for nearshoring to North American firms.
Well, Bernardo, you're very humble. You ran the largest publicly traded utility company in the region before coming to DigitalBridge. In terms of power sourcing for renewable energy, why were we successful in Scala in terms of sourcing that power? And why is that important to other businesses that we build down in the region?
That's a perfect question because it just picks up to what we've been discussing all day. So the Scala growth was based on the right site. We picked up the right site that had energy, had real estate opportunities to grow. And that was perfect. And of course, the Brazil grid is 60% hydro. So the fact is that the power coming into Scala was clean. So it was a perfect. It was all, you know, the planets aligned. And I think that that model is something that, as we described earlier today, is going to be applied globally if we can.
But of course, we need to find new opportunities to do it in a creative way, some to avoid grid sometimes, to be able to be closer to the source, and to be able to ourselves develop solutions for that that will make us greener without having to depend, as in Latin America, with the fact that the origin of the energy, the source, is green.
Well, I wanna thank all of you, for this quick tour around the world. A quick applause for my partners here. And with, I think we have a small video, Severin?
Yeah. We're gonna do a tour of the world, actually looking at some of the construction that we're doing literally today, all around, our portfolio companies.
Afternoon. I'm Raul Martynek. I'm the CEO of DataBank. DataBank is one of the largest operators of data centers in the U.S. Today, we are at our ATL4 facility here in Atlanta and delighted to show you our new development. DataBank's been in the Atlanta market since 2018. It's been a great journey. When we acquired the business in 2016, it was six data centers in three markets. Today, we're 70 data centers in 25 markets. The way I think about DataBank is I really think we're building the internet infrastructure of the future. If you think about the internet and the evolution of the internet over the last 2five years, it's physically changed, right? The internet looked very different in 1995 than it did in 2000, than it did in 2005, than it did in 2010. We believe the next 10 years is around this decentralization aspect that's gonna be driven by these ultra-low-latency applications. DataBank, we think, is extremely well-positioned to take advantage of that trend. I think it's gonna be a very bright future for DataBank and for DigitalBridge.
Hi. I'm Bruno Jacobfeuerborn, the CEO of GD Towers, one of Europe's largest leading tower companies, which is operating since 2023. We are operating in Austria and in Germany and already now, with these two countries, one of the leading tower cores in Europe. So today, we are here in a very rural area, very close to Düsseldorf, just half an hour away. If you look into the growth story into Germany, you can look into maybe three areas. One is closing white spots. What is a white spot? Even Germany, as being the most important economy in Europe, has still a lot of areas where there's no coverage at all. That's the reason why we call it white spots.
Building more than 1,000 additional sites in Austria and in Germany together, this gives us a huge income in the future because this is something with more than 11,000 ground-based towers only in Germany, where we have a lot of space and a lot of possibilities next to our rooftop we have to give them the chance to use our towers. This is a great business ahead of us. It's nice now with DigitalBridge being now part of this community and looking for growth and working together with a good team from DigitalBridge to make that happen. My name is Chiew, and I'm the CEO of AIMS. AIMS today is one of the leading data centers in Malaysia. What we've seen today here, it is our second CBD site, CBD meaning the Central Business District.
It is a dense ecosystem data center that equipped and dense with a lot of connectivity. This is something that we have been designing and developing for an AI use. Our customers that have just turned on a couple of weeks ago is an AI customer, and we were told that this is the first installation or a deployment of an AI in Malaysia. We believe the AI wave is coming. With the partnership that we have with DigitalBridge, there comes not only in terms of financial power, but what more importantly is the global experience in terms of the market, in terms of the industry. DigitalBridge has a very similar DNA as us, being a company that is agile, flexible, and yet it's all about pushing performance.
Hello. I'm Mike Finley, CEO of Boingo Wireless. I'm standing here in the middle of Grand Central, one of the great iconic train stations, not only in our country but in the world. It's a great place to describe what we do at Boingo. We build complex, converged, neutral connectivity networks in big venues, 18 stories below the ground. We've just completed a build of two new tunnels, a Long Island Railroad, and Grand Central-Madison, a new set of train tracks under the East River. Now, customers can enjoy connectivity, Wi-Fi, cellular, licensed, hybrid. And we're bringing it all together with one network. Everything that's gonna happen with AI, all the needs, all the purposes, all the speed, the reliability, the security that we're gonna need starts with a great network. That's what we build.
We build a great network in all of our venues so that those types of applications are gonna be reliable and be usable. It's been fantastic being a part of the DigitalBridge family. What's great about DigitalBridge is the amount of expertise and support that we get. Yes, access to capital and the financial backing and guidance and support that we get is fantastic. But more important is the family that Marc and Ben and the senior team have created and certainly the expertise that we have on our board, which really focuses in on our company and our future and what we're trying to build, has been unbelievably beneficial to us since we've been a part of the family.
So that was a quick trip around the world. As you can see, we've got shovels in the ground in a lot of different places. And I'm gonna do something of an audible. Severin, you didn't know I was gonna do this. But in my closing statements, I'd like all of our partners to come up here on stage with me. So Dean, Steve Stryker, yes, the lawyers in the background, Blake, Goldie, come on up here. If you were with DigitalBridge, come up on the stage here. Just stand up here with us. And I'm just gonna say a couple of comments before we finish here. Alex, that's you too. You're part of the team, you know, advisor. Careful. Where's Alex Gellman? Staffed out there somewhere.
Chris Moon.
Sorry. You can stand up front.
Fill in the space, you know, the where the as Bruno said, the white spaces. Look, I think hopefully, the most important thing you got out of today is our team. As I said, Leslie, come on up here. And, Peter Hopper, come on up here. There's more of you up there. Jon Mauck, get up here. Yep, yep. You're part of the team. I know. I called an audible 'cause that's what I do. Look, the first thing I wanna say is thank you, to all of our partners. You're the ones that make it happen on a day-to-day basis. A lot is said about DigitalBridge and, the, 11 years ago, this journey began with, with Ben and myself, and Tom Yanagi. He was one of the original guys here early.
And Alex.
And Alex Gellman. Where's Alex? Alex, get up here too. Yep. We need Alex up here. This is a really important guy, by the way, 'cause as I said, he's tolerated me for 30 years. I'll tell my wife, if you wish. But it's so important that you have great people driving these businesses. That's really the difference of what we've been able to accomplish is the fact that we build great companies and we build great customer relationships. And it really sets the table for where we're going in the future. And I love this quote from Jeff 'cause it's pretty interesting. And he says, what are people don't ask him?
He says, "What's not going to change?" Well, I'll tell you what's not going to change, for sure, is that people will need connectivity, and people will need, ultimately, the ability to access the cloud, internet, AI. And that's not going to change. You'll leave this room knowing that none of that is going to change. And why do we think that's important? It's important because we're building some of the most important businesses, and we're supporting some of the most important logos in the world. And the demand numbers that you see here are candidly irrelevant because if we don't have the right people and we don't serve our customers, we don't exist. And that's really it started for me 30 years ago with Alex doing that, which was ultimately the promise of working for customers and showing up for them.
That's really what we've been able to do. So at the end of the day, what gives us that opportunity is the fact that we do understand what we're doing. We understand this business at an intrinsic level that few really understand. It's beyond the operational expertise, the sector focus, building great platforms, and ultimately showing up for the customers. If you do that right, guess what happens? Bookings happen. New builds happen. It's not accidental that you end up with a pipeline of over 7 GW of opportunity, which went up 2 GW in, like, 30 days.
But we have a great opportunity. If you haven't gotten that from today, we've spelled it out for you in a very fundamental way that, first, we're forming capital, and we're forming capital in a way that we've never formed capital in the 11 years of this company. We've scaled our team. We've deepened our access to clients. We're forming a private wealth channel, got over $14 billion of capital talking to us right now to fill out our budget for this year and beyond and getting into a normal cadence and, most importantly, an institutional cadence around forming that capital. And why does that matter? It matters because we have a unique opportunity to deploy that capital, to invest it. And that's a real privilege. And the ability to invest that capital is exactly that. Steven, you're a little late, but you can get on up here.
Come on up on stage with us. And so we walked you through how we're gonna invest that capital and the thought at which it goes through. Tom laid out for you a simple algorithm. We believe we'll double the size of this company within five years. I expect to beat that. The reason I expect to beat that is 'cause I have strong conviction around our LPs. I have strong conviction around our portfolio companies. I have even stronger conviction around our product heads, the people that drive the investment strategies at this firm. They're building great businesses. And each of our strategies are actually businesses. And I hold them to that task of building a business. And that's really important. And they understand that. They understand that if you're running credit, you're building a business. If you're running late-stage venture growth, you're building a business.
And that's where we're going. We're building great businesses inside of DigitalBridge. This multi-strat idea is not a new idea. But what we are presenting to you as a GP is we are a new GP. We're a GP built for the future, focused on the future, and developing some of the most important and relevant infrastructure in the world. And at the end of the day, if we do that correctly, we fundraise, we invest, we continue to scale, you as our investors will profit from that, and you'll be rewarded. You spent a lot of time with us today. I'm deeply appreciative for all the hard work that went into this. Thank you for staying here for over three hours to hear our story. The first 10 years that got us here, Ben, will not be the same 10 years that got us forward. Come on forward.
And, Alex, but it did start with these three guys. You can come forward, Alex. We dec. We decided to take a chance to go build a different investment platform. That journey has taken us through this decade, and it'll take us through the next decade. We're really privileged to represent your capital. We're really privileged to represent our LP capital. And again, I wanna thank you for coming out today. I know we have a little bit of Q&A, Severin, but I wanted to bring the partners up on stage. Thanks to all of them. Please give it up to them. Thank you, everybody. All right.
Do we wanna do Q&A?
Yeah.
Just do it live.
Just do Q&A live. Yeah, yeah. All right. Severin went out and polled all of you on questions. And if we don't answer your question now, we'll be delighted to buy you an adult beverage of your choice and answer your question, or not an adult beverage of your choice, depending on how you look at it. But
Tom, you can answer as well.
Tom, come on up. Go ahead.
Sure. So one of the first questions is around, you know, our growth targets. We obviously laid those out today. I would say, you know, Marc, for you, when you think about 2x in five years, that kind of matches the data center growth that we mapped out, right, that 50 gigawatts on a global basis going to 100. How do you think about, you know, kind of meeting that demand from customers?
Well, look, I think we've laid out we're in the process of lighting up 2.4 GW right now. That's gonna cost us $25 billion-$26 billion. And then we have another pipeline behind that, another 7 GW behind that, which could cost us, you know, $70 billion-$80 billion. So we're just literally sitting on close to $90 billion -$100 billion of investment, in the next three to five years just in data centers alone, powering the AI economy. So that's gonna require if that's $100 billion of CapEx and you assume a 50% loan-to-value, we're gonna have to go from $50 billion of equity just to go do that. And Tom Yanagi's gonna be really busy 'cause he's gotta figure out how to raise the $50 billion of debt. What's interesting is that's just data centers, right? That's just one swim lane.
If you look across the other things that we're doing in mobile infrastructure, densification of networks, fiber connectivity, and some of the adjacencies that we see, like in sub-oceanic cables, low Earth orbiting satellite infrastructure, digital media infrastructure, some of the adjacencies that we've been successful at, you can begin to see that there is an opportunity to deploy not only $100 billion of AUM, but I would offer to you, if we continue to think about how to provide that power, which could be $0.50 on the dollar to every megawatt, there's probably another $50 billion plus of opportunity to develop renewable power sources adjacent to our data centers. And, and that's candidly why we, we entered InfraBridge was we wanted to get into the renewable space and infrastructure space. That's why we brought Alex over, brought Christian over.
So, putting the pieces of the puzzle, and I'm not trying to front-run where we're going, but trying to bring excellent people in to develop new strategies, having that platform in existing infrastructure, having new product sets. Look, I believe we can obviously get from $80 billion of AUM to $160 billion. I wanna challenge our team to get to $200 billion and beyond. But we have the building blocks there. You can see where we're going. It's really easy to map. And the real challenge for us is just making sure that we do a responsible job with our existing capital, continue to create good returns, return the DPI, as Kevin mentioned earlier, and then go out and chase that next, you know, that $25 billion-$100 billion and that $100 billion-$1 trillion and then the private wealth channels.
I'm really excited about what we're doing in fundraising. A lot of investors, public investors, don't see what we're doing because, as Kevin laid out for you, fundraising cycles are long, right? They're 18 months. And so this is kind of the first fundraising cycle where we've had an institutional team to go attack the marketplace. We never had that before. It was, as Kevin said, it was the two of us. It was Ben. It was every partner in the firm out fundraising. That institutionalization of fundraising is really important for us because now we're gonna be on a cadence where we can raise $8 billion, $9 billion, $10 billion a year to support that AUM growth that we're talking about, that $50 billion of equity. And to an extent, if we, if we end up getting in the renewable space, we continue to grow our infrastructure space.
We grow credit under Dean and Mike. I mean, you can begin to see a roadmap that even could look bigger. So I like our guidance. I think it's candidly conservative. I think we've put the fundamental building blocks in place that investors got to see today firsthand. And then you got to see the math behind it. You got to see the pipeline of fundraising. You got to see the pipeline of new construction. You see the depth of the new products and the team. We've laid it all out there for you. These are the building blocks and how you double. But you know me pretty well. If I put up a double, I obviously wanna do more than that. And we got a great CFO, and I got a great partner in Tom to help us.
Yeah. Maybe one of the questions we got, you know, for you, Tom, is around scaling, right? You've been part of organizations that have grown quickly and gotten to kind of the scale that we're looking to achieve over time. What are some of the things that, you know, you feel like are kind of critical success factors? What do you wanna do to help us execute that growth?
Yeah. It sort of depends on what part of scaling. You know, just growing the existing business, you know, that's relatively simple, you know, if we perform and we invest well. You know, we have to do other things as well. We have to be transparent with our investors. You know, we have to deliver, you know, what they need. But ultimately, performance is the most important thing that matters in the existing businesses. And if we do that, you know, those funds will grow. You know, in terms of adjacencies, you know, you have to really have conviction, and you have to be honest with yourself as to what you're good at and not just chase something for vanity reasons. You know, and so, you know, why would we if we were gonna go into something that's adjacent, why would we be good at it?
Is it because the customers are the same as customers in some of our other funds? Is it because the revenue model of those assets is similar to, you know, existing businesses that we're familiar with? You know, do we have the right people? Do we have the right talent? And, you know, are we do we have someone in the firm who's gonna own it and who's gonna wake up every morning thinking, "Hey, you know, I'm gonna make X successful"? So, you know, it's, it's about really making sure you have conviction about what you do and that you're gonna be really good at it. I think, you know, I think Dean talked about on the credit side the challenges that sort of generalist managers have because they're undifferentiated.
You know, I think you don't wanna fall into that bucket of just chasing a new trend that you're not really good at. So I think that's, that's the key, is to be honest with yourself. I think we have that in terms of the, you know, kind of the interplay among the management team where we challenge each other's ideas as to where we're really good and where we can do something that investors want, not just do something because a bunch of other people have done it and, and we wanna follow along.
Yeah. Interesting. One of the questions that we get, there's a lot of focus on data centers today. Obviously, AI, we talked a lot about that. But people wanna understand kind of the relevance to the network of the entire network. Maybe, Marc, you can talk a little bit about, you know, and you've touched on this in a couple of spots, you know, the other swim lanes in digital.
Yeah. I think there's three areas that I look at, in adjacencies to AI, Severin. On the connectivity side, what we're noticing is, particularly for these AI workloads, much larger strand count, redundant paths of fiber. So if an old data center had two paths of fiber, an AI data center maybe will have four or six different diverse paths. Strand count's much higher, more dark fiber. We're beginning to see that in some of our businesses in terms of the connectivity piece. We're beginning to see a rise in bookings from the hyperscalers as they ultimately build out to those bigger data centers and those language models as we move to inference.
But I really see this hitting home in kind of the next phase of data center development in AI, which will be ultimately those hyper-edge locations for AI that Raul was talking about. And that'll be really important for us because it'll create more metro connectivity 'cause a lot of that connectivity will be in metro. As you saw that with AIMS, like a big AI workload right in the downtown CBD area. Well, to make that work, you need fiber, diverse paths, interconnection, and there's gonna be a lot of revenue opportunities in the fiber space. And then in addition to that, for AI workloads to really work, you've gotta have great sub-oceanic connectivity.
A lot of the early cables that were laid in the late 1990s and early 2000s, they're now reaching that age of 20, 25 years old where there begins to be functional obsolescence. And as you know, glass dissipates underwater over time. So there's gonna be a massive amount of new building in sub-oceanic fiber that's not gonna be four pairs or six pairs. Christian, you're shaking your head 'cause you know exactly what I'm talking about. We're talking about 12 pairs, 16 pairs, 22 pairs. These are sub-oceanic routes that people haven't seen yet. There's gonna be a whole wave of investment in transcontinental connectivity that's really exciting. And then the last thing I would say is, just that slide we put up around densification. Again, this isn't a guess.
This is a highly educated guess because I got the privilege of building, densifying, you know, 3G networks with Alex. We were there in the 4G densification phase, and now we're seeing 5G densification. We're having those conversations with customers that inform us about where we're going. Those conversations are getting very detailed. What's clear is you're gonna need more capacity, and you're gonna need more connectivity at the cell site level, which will ultimately translate you're gonna need that, as you just heard from Mike Finley, he's doing it 18 stories below New York City. So this is really exciting, right, because there's a whole phase of 5G connectivity that isn't so much about 5G itself, but it's really about the applications. The next phase of mobility is all about applications. That starts in our data center.
It transmits through our fiber paths at companies like Everstream and Zayo. Then it goes out to the macros, and it goes to the small cells, and it goes to the edge computing. So as you've always said, data gravity, right? Data starts, and then it ultimately falls naturally to where it goes. None of that model works unless you have all the pieces of the ecosystem. That's what we've been building for 11 years, and it's now manifesting itself. That's really exciting.
The ability for, as Mike Finley said, his ability to talk to other, you know, portfolio companies, whether he's talking to Zayo or Everstream for fiber, or whether it's a tower business and we've gotta go jointly bid on a state project like we did with Zayo where we won the fiber piece and we won the tower piece. These conversations are happening more and more at DigitalBridge where we gotta show up not with just one portfolio company. We're showing up with a customer with multiple portfolio companies to solve the problem. That was always the vision when Ben and I started the business, was that could we create an investment platform that could go chase convergence? It's starting to manifest itself in AI, which is really exciting.
Yeah. Maybe stepping to the fundraising environment. You know, that's something where there's a lot of attention right now. Where are LPs kind of in their journey around understanding AI and, you know, how and when does that kind of translate into capital formation? You see, you know, AI taking off.
Yeah.
The demand is taking off. When is the fundraising, and how does that work?
Well, I think the first thing that we say, out on the fundraising trail is we just tell them, like, calm down. Like, if it's if it's too good to be true, it's not good to be true. And, and this is, again, taking the applied lessons of cloud where there was a lot of failures in, in early days of cloud. And so we tell investors, "Look, don't get overexcited. Don't jump in the AI pool too fast. There's a safe place to go in AI, which is infrastructure.
That's a good place to start because that's the beginning of where it all starts." And then at the same time, just making sure that, when our investors are doing stuff that's a bit off-piste, they call us when we get a chance to talk to them and explain to them, "Do we think that's a good idea or a bad idea?" I think we get to see a little bit of that in our late-stage venture growth products. So that's with Alex, and you've been a part of that team a little bit too. And it's exciting 'cause we get to test the technology. We dipped our toe in the water, of course, with our partnership with Intel and investing in Articul8, which is a great combination of us and Intel, chasing generative AI, in a space that's underserved.
So I urge a lot of caution to investors around AI. And then, of course, we're trying to create good co-investments for them. I think the recapitalization advantage with Silver Lake, Kevin mentioned it earlier. That was a great partnership between us and Silver Lake. When we went out to go raise the co-invest capital, $ billions of capital showed up. Why? It's a good idea. There's nothing beats a good idea. So when we're out raising co-invest capital, if we have a great management team with a great idea and has a great backlog, you win. Vantage showed us that. That was a very fast co-investment syndication, you know, raising $ billions in effectively 30 days where we were oversubscribed. Again, what works? What works is good ideas in AI, long-term contracts, a great management team, and a great pipeline.
When we bring those ideas to market, and we have those co-investment ideas and opportunities, Severin, that's what's working. That's what LPs want in AI. They want exposure to stuff right now that's safe, reliable, and has, you know, strong counterparty, credit risk.
Yeah. One of the things that we get questions about and have today is, you know, we see other alternative asset managers talking about digitization as being, you know, something that's more important to them. How does specialization matters manifest itself when you're talking to LPs? I mean, how do you kind of highlight that differentiation?
I first start out with a simple concept, which is who's performed for you. And that's really easy. We've had 7 exits in the last, you know, 18-20 months. We've created over $8 billion of DPI for our investors. We've had the most exits in digital infrastructure of any GP in the world, and it's not even remotely close. So, you know, investors are funny. They're like they're like consumers. They vote with their wallet. And ultimately, if we're returning capital, it gives us a great conversation piece for them to bring capital back to us. So the success we're having in this quarter, the success we're gonna have the rest of this year is a function of the fact that we've been responsible at the capital. We've returned the capital. And the generalist peers that have returned very little DPI in digital infrastructure.
We've been returning DPI. That's not an affront to our competitors and our peers. It's just we've been doing this a really, really long time. They've been doing it for a very little time. So because we've been at it a long time, it's given us the chance to return capital. They're relatively the new guys on the block, and so it's gonna take them time to put up the walls and return the capital. So we hear the generalist GPs on their public calls talking big numbers around data centers and AI and how they all wanna be in digital infrastructure. That's great. It's validation of what we're doing. We're the guys that have been doing it 30 years. So when push comes to shove and allocators, you know, wanna put money into digital infrastructure, and it's more pronounced, Severin, in co-investments.
When we have a co-investment that goes out, the reason we were able to form $10 billion in co-investment last year was not only 'cause Kevin worked really hard, but we had really good platforms. We had really good ideas. And investors will gravitate to co-investments where there's strong management teams and a great track record. So some of our peers in the generalist space have hung syndications. We don't have any hung syndications. That's really important because if you have a hung syndication, then your portfolio company doesn't have the equity and the capital to keep growing. We've been able to always support. You've heard from our CEOs today. DigitalBridge not only shows up with the money, we show up with the ideas, and we show up with the execution. The money's important, but the execution is what matters.
The fact that we've been entrusted with capital and we've returned it, that's, that to me is exactly what our job is. We have no confusion in our shop about what we do. When investors give us their money, it's seminal that we return it, and we return it with a good return.
Terrific. Why don't we end on that? I think we can do some more Q&A. We've run a little bit over time, but we're gonna have cocktails in the next room here. And we'll look forward; all of our senior management team will connect with you in person here. So, I wanna end by thanking Marc and Tom and the rest of the DigitalBridge team for joining us today.