Key facts
- Csquare's IPO raised $1.01 billion, missing its target of $1.35 billion.
- The company's shares were priced at $21 each, below the initial range.
- Csquare plans to use net proceeds to pay down debts.
- The data center operator lost $66 million in the first quarter.
- Brookfield Asset Management is a backer of Csquare.
Dallas-based data center operator Csquare, backed by Brookfield Asset Management, raised $1.01 billion in its initial public offering, falling short of its $1.35 billion target. The company's shares priced at $21 each, below the expected range of $23 to $27, potentially indicating a cooling investor appetite for data center infrastructure.
Csquare, which operates 63 North American data centers and one in London, began trading on the New York Stock Exchange under the ticker CSQR. The offering generated $1.01 billion after accounting for $40 million in commissions and discounts. The company intends to use a portion of the net proceeds to reduce its existing debts, which include a $771 million revolving credit facility and $150 million in promissory notes to Brookfield.
Last year, Csquare distributed $785 million to Brookfield, a sum significantly exceeding its projected 2025 operating cash flow, according to PitchBook. The firm incurred a $66 million loss in the first quarter, with financing costs outpacing its growth.
Brookfield established Csquare in 2024 by acquiring the bankrupt colocation company Cyxtera Technologies and merging it with its own colocation business, Evoque. Brookfield also self-funded the acquisition of 10 additional data center properties valued at $1 billion in October, subsequently integrating them into the Csquare portfolio. Csquare's primary revenue streams are derived from colocation and interconnection services.
The IPO follows other recent listings in the AI infrastructure sector, such as SK Hynix and Cerebras Systems. However, investor enthusiasm for these recent IPOs appears to be waning, with SK Hynix shares dropping 10% in their initial trading days and Cerebras's shares declining by nearly 50%. In parallel, Blackstone has been divesting data center assets, selling stakes in three properties to Digital Realty Trust and terminating plans for a large Virginia data center development through its subsidiary QTS.