SUBSCRIBE FOR ACCESS

published in PERECredit

Data center specialist Colovore taps Blackstone for $925m debt facility

BySamantha Rowan

May12, 2025

Colovore, an owner-operator of liquid-cooled data centers, will use the financing to expand its portfolio in major US markets.

Colovore, a Santa Clara-based owner-operator of high-density, liquid-cooled data centers, has tapped Blackstone to provide a $925 million debt facility that will allow the company to expand its portfolio of AI-focused data centers in major metro-edge markets across the US, PERE Credit can reveal.

The moves come as explosive growth in the use of AI has led to rising demand for this type of property, said Sean Holzknecht, president and co-founder. The credit facility is the latest step in an expansion plan that included the sale last year of a majority stake to New York-based King Street Capital Management.

Although the partners had spoken to bank lenders specializing in the space, Blackstone ultimately got the nod because of its experience on the debt and equity side of the equation, said Brian Higgins, co-founder and managing partner at KingStreet. He declined to comment on the terms of the financing.

“Blackstoneis one of the largest data center investors in the world, and they have theunderstanding [that AI computing is going to shift from training to inferencewhich will impact computing power and the infrastructure required],” Higginssaid. “It’s like [legendary hockey player] Wayne Gretzky used to say, ‘I skatewhere the puck is going’ and that is what we’re doing.”

For King Street, the debt facility comes at a time when the data center industry is struggling to keep up with advancements in chip technology, Higgins said.

“We saw that data center technology has been fairly flat, yet chip technology has been going straight up, Higgins said. “But that power means heat, and that heat needs to be neutralized.”

Colovore opened its doors 13 years ago, fueled by an observation Holzknecht and his partner Peter Harrison independently had while working at different firms. The duo believed there was a growing need for ultra-dense, liquid-cooled data centers purpose-built for high-density workloads.

“The inspirations started after the dot-come boom and bust, when I was running a data center business. I saw companies purchasing new IT equipment and noticed very quickly the servers had miniaturized and the amount of power required per rack had increased drastically,” Holzknecht said. “It was a frustration for the clients. IT folks want to pack their racks from top to bottom efficiently and this change was starting to have an impact on that.”

This led Holzknecht to do a deep dive into ways in which it would be possible to increase densities in data centers, leading the partners to launch Colovore.“We came to market with a liquid-cooled, high density offering that really didn’t exist in the market outside of our company,” he added.

While air-cooled data centers have been a common approach for developers over the past 30 years, Holzknecht noted this method is less efficient. As servers exhaust hot air into a room, the data center then cools the air via traditional air conditioning to keep the ambient temperature in the room at a neutral level.

“For lower heat loads, the works just fine. But this was becoming a real problem for higher heat loads, and the idea was that with liquid cooling, you have a water loop within the data center that addresses the heat load right at the source.That allows the data center to capture the heat and pull it out through the water loop,” Holzknecht explained. “It is ten times as efficient as air cooling and, from a power usage efficiency standpoint, it costs a lot less to operate a liquid-cooled data center.”

While the largest tech companies had the ability to solve these problems internally, smaller companies often found these issues more challenging.

“We really wanted to solve for the problems engineers had that were not necessarily obvious to everyone, but if you’re on the data center floor, it was obvious this was a challenge,” Holzknecht added. “With the advancements in AI, this became a necessity.”

Today, Colovore is focused on serving Fortune 500 enterprise companies –many of which are working to convert part of their tech stack to AI, according to Holzknecht.“The challenge for those data centers and their customer is that when they refresh their technology, some percentage of that workload will require liquid cooling,” he noted.

‍