BlackRock unveils £500 million bet on UK data centers

New York: BlackRock Inc. plans to invest up to £500 million ($678 million) in Britain's data center market, a move unveiled as Chief Executive Officer Larry Fink prepares to join US President Donald Trump on his state visit to the UK.

The asset manager has acquired a site in west London to seed a new venture with operator Gravity Edge, according to a statement. The partnership, called Digital Gravity Partners, will focus on buying existing data centers with underused capacity, said Thomas Mueller-Borja, BlackRock's global co-head of real estate. Global investors are racing into data centers, betting that the rise of artificial intelligence will fuel soaring demand for infrastructure to power it. That has pushed alternative asset managers to chase mega-projects designed for hyperscalers such as Amazon.com Inc.'s AWS, Microsoft Corp. and Alphabet Inc.'s Google.

But Britain faces headwinds: some of the highest electricity costs in Europe and a power grid already strained by demand.

"We are trying to find existing assets that are underutilized but have power," Mueller-Borja said. "We aren't doing ground-up development for hyperscalers."

BlackRock's initial investment of more than £100 million will come from its ₹1.2 billion Europe Property Fund VI, which closed in July. Targeting smaller facilities serving enterprise clients will broaden the pool of potential buyers for upgraded properties, contrasting with hyperscale projects that require billions in capital spending.