KKR and Oak Hill Pour Nearly $2 Billion Into European Data Center Platform

The race to build the digital infrastructure backbone for artificial intelligence has claimed another multi-billion dollar commitment, this time in Europe. KKR, the global investment giant, announced Tuesday it is injecting an additional $1.5 billion into Global Technical Realty, a European data center platform it co-founded just five years ago. Joining the bet is Oak Hill Capital, which is committing approximately $400 million to the venture in what marks a significant vote of confidence in Europe's ability to capture a meaningful share of the AI infrastructure buildout.

The investment underscores a broader transformation sweeping through the private equity world, where firms are increasingly viewing data centers not as niche real estate plays but as critical enablers of the next generation of computing. With artificial intelligence workloads demanding exponentially more power and cooling capacity than traditional cloud applications, investors are racing to back platforms capable of delivering what the industry calls "AI-ready" facilities—data centers engineered from the ground up to handle the intense computational requirements of large language models and machine learning applications.

Global Technical Realty's trajectory offers a window into how quickly the European data center market has evolved. Founded in 2020 by Franek Sodzawiczny, a veteran data center entrepreneur, alongside KKR, the platform has established itself as what industry insiders describe as a "built-to-suit" developer—meaning it designs and constructs facilities tailored to specific customer requirements rather than building speculative capacity and hoping to fill it later.

This approach has proven particularly valuable as hyperscale cloud providers and AI companies have grown more sophisticated in their infrastructure demands. A one-size-fits-all data center no longer suffices when customers need facilities capable of handling power densities that would have seemed fantastical just a few years ago. Modern AI training clusters can consume as much electricity as small towns, requiring cooling systems, electrical infrastructure, and network connectivity far beyond what traditional data centers were designed to provide.

Since its inception, GTR has built what it describes as a "strong footprint" across both established and emerging European markets, though the company has remained relatively quiet about specific locations and customer commitments—a common practice in an industry where competitive positioning often depends on securing scarce power allocations and land parcels before rivals can mobilize. What is clear is that the platform has assembled a team drawn from some of Europe's most experienced data center operators, giving it credibility with hyperscale customers who are notoriously demanding about technical specifications and operational track records.

The nearly $2 billion in fresh commitments will fuel what GTR characterizes as a "substantial development pipeline," including both greenfield projects in new markets and expansion of existing facilities. For KKR, which is funding its investment primarily from its Global Infrastructure Strategy, the bet on GTR fits within a broader portfolio that has become one of the most aggressive in digital infrastructure globally.

The numbers are staggering. KKR has now committed approximately $34 billion of equity into digital infrastructure across 24 investments, a figure that doesn't include the more than $20 billion it has deployed into power and renewable energy projects—increasingly relevant given that data centers' voracious appetite for electricity has made power procurement as important as real estate acquisition. The firm's data center portfolio alone spans five platforms across the United States, Asia-Pacific, and Europe, encompassing more than 155 facilities and a development pipeline capable of delivering 12 gigawatts of capacity.

To put that in perspective, a single gigawatt of data center capacity can power roughly 700,000 homes, meaning KKR's development pipeline—if fully realized—could theoretically serve the residential electricity needs of a mid-sized European country. Of course, data centers consume power far more intensively than residential users, but the comparison illustrates the scale of capital flowing into this infrastructure category.

Andrew Peisch, a partner at KKR who has been instrumental in building the firm's digital infrastructure practice, framed the investment in terms that have become familiar in private equity circles. "As rapid cloud growth continues and scaled AI demand begins to materialize, the need for high-quality, power-efficient, and scalable data center infrastructure in Europe has never been greater," he said in a statement. The reference to "scaled AI demand" is telling—while artificial intelligence has dominated headlines for the past two years, the actual deployment of AI workloads at enterprise scale is still in relatively early stages, suggesting investors believe the infrastructure buildout has years, if not decades, to run.

For Oak Hill Capital, the GTR investment represents a continuation of a three-decade focus on digital infrastructure, though the firm's approach differs somewhat from KKR's sprawling global strategy. Oak Hill positions itself as a "thematic, middle-market private equity firm," meaning it concentrates on identifying secular trends early and building portfolios of companies positioned to benefit from those shifts.

The firm and its predecessor entities have made 30 digital infrastructure investments over the years, with GTR marking its fourth platform investment specifically in the data center sector. That track record gave Oak Hill credibility with both KKR and GTR's management team, who were looking for a partner that could add strategic value beyond simply writing a check.

"We are pleased to invest in GTR and collaborate with KKR to support a platform that sits at the intersection of cloud, AI, and critical infrastructure," said Adam Hahn, a partner at Oak Hill. The firm's experience scaling digital infrastructure businesses—including fiber networks, wireless tower companies, and telecommunications platforms—could prove valuable as GTR navigates the operational complexities of expanding across multiple European jurisdictions, each with its own regulatory requirements, power market dynamics, and real estate constraints.

Oak Hill's $400 million commitment, while smaller than KKR's, is substantial for a middle-market firm and suggests confidence that GTR can generate returns competitive with other infrastructure investments. Private equity firms typically target internal rates of return in the mid-to-high teens for infrastructure investments, though the calculus has shifted somewhat as institutional investors have grown more comfortable with lower returns in exchange for the stability and inflation protection that infrastructure assets can provide.

The investment arrives at a moment when Europe's position in the global data center hierarchy has become a subject of intense debate. While the continent has long hosted significant cloud infrastructure—particularly in markets like Frankfurt, Amsterdam, London, and Paris—it has lagged the United States and increasingly China in the race to build AI-optimized facilities.

Part of the challenge is structural. Europe's fragmented power markets, stringent environmental regulations, and complex permitting processes can make it significantly more difficult and time-consuming to bring new data center capacity online compared to parts of the United States where utilities and local governments have become adept at fast-tracking digital infrastructure projects. At the same time, Europe's commitment to renewable energy and sustainability has created opportunities for developers who can credibly demonstrate that their facilities will run on clean power—a consideration that matters enormously to hyperscale customers facing pressure from investors and regulators to reduce their carbon footprints.

GTR appears to be positioning itself to capitalize on both the challenges and opportunities. Sodzawiczny, the platform's CEO and founder, emphasized that the new capital "enables us to scale our team, deepen our operating capabilities, and move faster into new markets"—language that suggests GTR believes speed to market will be a competitive advantage as customers scramble to secure capacity.

"Demand from hyperscale and AI-driven customers across Europe continues to accelerate," Sodzawiczny said, "and this capital enables us to scale our team, deepen our operating capabilities, and move faster into new markets." He described the investment as "a major inflection point" for the platform, suggesting GTR is preparing to shift from a development-stage company to a scaled operator with multiple facilities under construction simultaneously.

Understanding the economics of this investment requires understanding the unique dynamics of the hyperscale data center market. Unlike traditional colocation facilities, which lease space to hundreds or thousands of individual customers, built-to-suit platforms like GTR typically work with a small number of very large customers—think Amazon Web Services, Microsoft Azure, Google Cloud, or emerging AI companies like OpenAI and Anthropic.

These customers often sign long-term lease agreements, sometimes spanning 10 to 15 years, providing the kind of contracted revenue that infrastructure investors prize. The trade-off is that these customers are extraordinarily sophisticated, with in-house teams capable of evaluating everything from cooling efficiency to network latency to the reliability of local power grids. They know exactly what they need, and they're willing to walk away from deals if a developer can't meet their specifications.

This dynamic has created a market where track record and technical credibility matter enormously. A developer's ability to point to successfully delivered projects, relationships with equipment vendors, and expertise in navigating local permitting processes can be the difference between winning and losing a major contract. GTR's decision to assemble a team "drawn from some of the industry's most experienced participants" reflects this reality—in a market where mistakes can cost hundreds of millions of dollars and years of delays, customers are willing to pay a premium for proven operators.

If there's a single factor that will determine whether GTR's expansion plans succeed, it's likely to be power. The data center industry's electricity consumption has become one of the most contentious issues in infrastructure development, with some estimates suggesting that data centers could account for as much as 8% of total U.S. electricity demand by 2030, up from roughly 3% today. Europe faces similar pressures, complicated by the continent's commitment to phasing out fossil fuel generation and the geopolitical disruptions to energy markets triggered by Russia's invasion of Ukraine.

For data center developers, this means that securing reliable, affordable, and increasingly clean power has become as important as acquiring real estate. Some developers are going so far as to invest directly in power generation, either through partnerships with utilities or by developing their own renewable energy projects. Others are exploring emerging technologies like small modular nuclear reactors, which could theoretically provide carbon-free baseload power at the scale data centers require, though the technology remains largely unproven at commercial scale.

KKR's $20 billion investment in power and renewables alongside its data center portfolio suggests the firm understands this dynamic. The ability to offer customers not just physical infrastructure but also power solutions could become a significant competitive advantage, particularly in markets where grid capacity is constrained and utilities are struggling to keep pace with demand growth.

The GTR investment is unlikely to be the last major capital commitment to European data center infrastructure. As AI workloads continue to scale and European regulators push for data sovereignty—the idea that European citizens' data should be stored and processed within the continent—demand for locally based computing capacity seems likely to grow.

At the same time, the market faces genuine uncertainties. The economics of AI remain unproven at scale, with questions about whether the technology will generate sufficient value to justify the enormous infrastructure investments being made. Power constraints could slow development timelines or force projects to less desirable locations. And competition is intensifying, with both established data center operators and new entrants backed by deep-pocketed investors all chasing the same opportunities.

For KKR and Oak Hill, the bet is that GTR has the team, the customer relationships, and now the capital to emerge as one of Europe's leading data center platforms. Whether that bet pays off will depend on execution—the unglamorous work of securing permits, negotiating power contracts, managing construction timelines, and delivering facilities that meet the exacting standards of hyperscale customers. In an industry where billions of dollars can hinge on the ability to deliver a facility six months ahead of schedule or secure a power allocation that competitors couldn't, the devil is very much in the details.

What's clear is that the infrastructure underpinning the AI revolution is being built right now, and the firms writing the largest checks are betting that Europe will be a critical theater in that buildout. With nearly $2 billion in fresh capital, Global Technical Realty has the resources to play a leading role in that story. Whether it can execute on that opportunity will be one of the more interesting questions in infrastructure investing over the next several years.