New BC Partners-backed company to focus on data centers, cybersecurity

SAN FRANCISCO(Reuters) - Private equity firm BC Partners said it would turn the data center portfolio it acquired from CenturyLink CTL.N for $2.8 billion on Tuesday into a new technology company called Cyxtera Technologies.

Cyxtera will be the latest private equity-backed company looking to take advantage of U.S. businesses’ burgeoning demand to have their data hosted and connected to the Internet, which has raised valuations in the data center space.

Earlier this year, Digital Bridge Holdings LLC, a private firm that invests in data centers, agreed to acquire Vantage Data Centers Management Co LLC from buyout firm Silver Lake Partners for more than $1 billion.

Private equity firms BC Partners and Medina Capital will co-own Cyxtera, and said they would try to make the new company stand out by mixing data centers with cyber security assets.

While CenturyLink’s 57 data centers make up the majority of the company, the cyber security firms that were rolled into it by Medina Capital, called Cryptzone, Catbird, Easy Solutions, and Brainspace, will be key to helping the Miami-based company grow revenues, said Cyxtera CEO Manny Medina.

Medina is the former chief executive of Terremark, a data center company that was sold to Verizon Communications Inc VZ.N in 2011. Verizon closed the sale of its data center business, that included most of Terremark to Equinix Inc EQIX.O for $3.6 billion on Monday.

“Like we did at Terremark, we have a game plan to acquire products that work well together and integrate them into solutions that will become market leaders,” Medina said.

Cyxtera will be able to cross-sell cyber products to its 3,500 existing data centers. The company will also be able to develop new cyber products to help protect data centers specifically, which is an emerging area with revenue potential, said BC Partners managing director Justin Bateman.

CenturyLink will retain a minority stake in the company worth $150 million, while Longview Asset Management is also an investor.

Reporting by Liana B. Baker in San Francisco; Editing by Joseph Radford