On May 28, I Squared Capital signed a definitive purchase and sale agreement to acquire 10 data center facilities from Cogent Fiber, a wholly owned subsidiary of Cogent Communications Holdings, for $225 million in cash. The seed portfolio spans nine U.S. markets and includes approximately 53 megawatts of installed power capacity and 259,000 square feet of available colocation space.
The acquisition launches a new U.S. data center operating platform targeting colocation, high-density deployments, and artificial intelligence inference infrastructure. I Squared has committed up to $1 billion to build the platform through capital investment, customer-led expansion, and additional acquisitions.
The portfolio includes facilities in Chicago, Atlanta, Phoenix, Los Angeles, Kansas City (Mo.), Baltimore, Houston, Nashville, and Stockton, Calif. These are secondary and tertiary markets where power availability and land costs remain favorable relative to Northern Virginia or Silicon Valley.
Cogent Communications, primarily a fiber and internet connectivity provider, is shedding assets that do not align with its core network business. The $225 million price implies roughly $4.25 million per megawatt of installed capacity, a discount to recent greenfield development costs that can exceed $10 million per megawatt in constrained markets.
I Squared is not buying empty shells. The facilities are operational, with existing power infrastructure and tenant relationships. The installed capacity provides immediate revenue while the 259,000 square feet of colocation space offers expansion runway without the 18- to 24-month lead time of new construction.
The $1 billion commitment signals that I Squared sees a structural supply gap in mid-market colocation. Hyperscalers dominate the largest builds, but enterprise tenants and AI inference workloads require dense, lower-latency facilities in distributed locations. The nine-market footprint gives I Squared a platform to serve that demand.
AI inference—the process of running trained models on new data—is increasingly moving to edge locations to reduce latency. Inference workloads require less power than training clusters but demand reliable, high-density colocation. I Squared is positioning its platform to capture that shift.
The deal structure is straightforward: a cash acquisition of an operating portfolio with a committed capital plan for growth. No seller financing, no earnouts, no complex joint venture structures. I Squared is deploying institutional infrastructure capital into a sector where demand continues to outstrip supply.
This transaction reflects a broader market dynamic: capital is rotating from office and retail into data centers, industrial, and infrastructure. Institutional investors are willing to pay premiums for assets with long-term secular demand drivers. The $225 million seed portfolio gives I Squared a beachhead in a sector where scale matters.
The $1 billion commitment is not a ceiling. If the platform performs, I Squared can raise additional capital from its existing funds or co-investment partners. The infrastructure fund model—long-dated, patient, return-focused—is well suited to data center development where lease-up periods can extend beyond typical value-add timelines.
For Cogent, the sale frees up capital and management attention for its core fiber business. For I Squared, the acquisition provides an operating platform with existing power, space, and customer relationships. The question is whether the $1 billion commitment is enough to build a competitive national platform in a market where hyperscalers are spending $10 billion per quarter.