Novacap Raises $1 Billion for Digital Infrastructure Fund
Canadian private equity firm Novacap Investments Inc. has successfully closed a $1 billion fund dedicated to investing in digital infrastructure assets. The fund-raising process, which spanned two years, was challenging due to rising interest rates and a sluggish acquisition market.
Novacap's target for the new fund includes approximately 10 regional companies offering connectivity and data access services, backed by tangible infrastructure. The firm plans to invest up to $100 million in each entity.
Institutions, family offices, and high net-worth individuals from across North America, Europe, the Middle East, and Asia participated as fund investors.
Ted Mocarski of Novacap highlights the ongoing surge in demand for digital infrastructure fueled by the rapid advancements in artificial intelligence (AI). He emphasizes that these technological innovations necessitate increased power, storage, and connectivity.
Despite its experience with technology companies, Novacap diversifies its investments across financial services and other sectors. Notably, the firm boasts investments in consumer businesses like clothing designer Joseph Ribkoff and mattress manufacturer Kingsdown.
CEO Pascal Tremblay acknowledges that 2025 may not be a particularly robust year for the private equity market. He anticipates a unique market dynamic due to the influx of capital raised in 2020 and 2021 seeking deployment.
Alex Russ, Senior Managing Director at Evercore Inc., which assisted Novacap in the fund-raising process, confirms strong investor interest in the digital infrastructure fund amidst a highly competitive market.
Notably, private equity funds in Canada raised only C$2.25 billion in the first eleven months of 2024. This figure represents the lowest aggregate amount since 2018, attributed to challenges in achieving liquidity and delayed capital returns to limited partners.