(Bloomberg) — The company behind a $4.75 billion data-center cooling deal said demand for its services will keep growing even if the buildout of artificial intelligence infrastructure slows down.
Ecolab Inc., which agreed last week to buy CoolIT Systems Inc. from funds managed by KKR & Co., expects revenue in its data center business to keep growing at least 20% a year “for the foreseeable future,” said Josh Magnuson, the company’s general manager for global water solutions. That’s because demand for computing power keeps going up and older facilities will need to be overhauled to meet the needs of newer chip models, he said.
The AI boom has fueled huge investments in infrastructure and boosted valuations of some tech companies into the trillions of dollars. While the technology is improving and gaining traction with businesses and consumers, it’s still unclear what the return on investment will be.
“If there’s an AI bubble or not, I don’t think it matters,” Magnuson said in an interview at Bloomberg’s Chicago office. “Whether it’s a AI bubble or a lot of little bubbles that pop, the overall demand curve is going to continue to move forward regardless.”
Data centers are the fastest-growing business for Ecolab, a $74 billion company that helps customers optimize their water use across a variety of industries. The deal for CoolIT is the company’s biggest in over a decade. The purchase price is more than 17 times what KKR paid just three years ago — a premium that highlights surging demand for cooling systems in data centers.
St. Paul, Minnesota-based Ecolab is positioning itself as a global leader in liquid cooling, which is steadily replacing air-powered systems as the technology of choice for data centers because it’s more energy efficient. While just 5% of data centers now use liquid cooling, Magnuson expects that to increase over the next decade because newer chips require more power and can’t be kept cool enough with traditional air-cooling methods.
Ecolab sees opportunities to claim a larger share of data center spending by combining its water-treatment services with CoolIT’s systems such as coolant distribution units, cold plates and direct-to-chip cooling technologies. Beyond new construction, the company expects continued demand for cooling from retrofits of existing data centers and conversions of alternative sites such as crypto miners and former steel factories.
The acquisition is just the latest in a flurry of recent deals in data center infrastructure and liquid cooling in particular. NVent Electric Plc, another firm that specializes in liquid cooling, said last week that it’s planning to pursue “larger bolt-on” acquisitions to further accelerate its growth.