Houlihan Lokey Advises Colohouse

Houlihan Lokey is pleased to announce the placement of a credit facility and equity financing to support Colohouse, a portfolio company of Valterra Partners (Valterra), in its acquisition of Hivelocity. The transaction closed on March 28, 2024. Houlihan Lokey served as the exclusive buyside advisor and placement agent to Colohouse.

Colohouse is a retail colocation, cloud, security, and managed service provider with 25+ locations in 20+ cities in North America, Europe, and Asia. The company offers a full suite of services giving customers the flexibility to customize their IT infrastructure needs to meet their business objectives. Valterra formed the Colohouse platform in 2020, and the Hivelocity acquisition represents the seventh acquisition since 2021. Colohouse’s acquisition strategy has been focused on acquiring regional colocation and managed service providers to create a national platform to provide customers with a full set of digital infrastructure solutions.

Hivelocity is one of the largest and fastest-growing pure-play, bare metal cloud providers in North America. The company owns and operates a modern inventory of 11,000+ servers across 30+ data center locations around the world. Colohouse’s acquisition of Hivelocity adds a highly complementary bare metal product offering that has been one of the fastest-growing segments within the data center sector. The combined platform of Colohouse and Hivelocity creates a retail colocation, cloud, managed services, and bare metal platform of significant scale with 40+ locations and 7,000+ customers, rivaling a scarce number of middle-market players within the data center sector. This strategic move combines the portfolio of two well-established providers with a focus on cloud and bare metal services to meet growing market demand.

Based in Austin, Texas, Valterra is a private equity advisory firm providing capital to U.S.-based, forward-facing infrastructure businesses through the management of private funds. Valterra focuses on companies that operate adjacent to traditional core infrastructure assets with similarly defensible demand profiles. These businesses benefit from the same underlying macroeconomic drivers but have a larger operating component that can generate higher risk-adjusted returns. Valterra targets investments in companies that operate in the communications infrastructure, transportation infrastructure, clean infrastructure, and energy transition spaces. Valterra’s objective is to provide infrastructure businesses with the resources they need to maximize their growth potential and transform them into industry leaders.

Houlihan Lokey served as the exclusive buyside advisor and placement agent to Colohouse, assisting the company in arranging, structuring, and negotiating concurrent debt and equity financings to support the acquisition. Houlihan Lokey’s Digital Infrastructure team has now worked on three transactions involving Colohouse since 2020, highlighting the team’s expertise and continued leadership in the data center sector and ability to maintain long-standing relationships with companies across the digital infrastructure ecosystem. Houlihan Lokey secured a highly attractive financing solution in an expedited time frame to meet the demands of Hivelocity’s sellside M&A process, and the financing highlights Houlihan Lokey’s success and momentum in simultaneously raising debt and equity capital to optimize capital structure solutions.