Nabiax’s CFO on sourcing €320m for Spain’s biggest data centre debt deal to date

Iván Paja, the data centre specialist’s chief financial officer, says the financial strength of the firm’s investors and tenants has allowed it access to a healthy pool of funding options since inception.

Nabiax, the Spain- and Latin America-focused data centre specialist, last month upsized an existing €285 million syndicated loan to €320 million in a transaction that has been described by executives familiar with it as the “biggest debt transaction arranged for data centres in Spain to date”.

The data centre specialist, majority owned by the infrastructure fund Asterion Industrial Partners and 20 percent owned by the Spanish telecoms group Telefónica, tapped the same consortium of 12 domestic and international banks that capitalised its €550 million purchase of 11 data centres from Telefónica in July 2019. The lending group includes Spanish banks BBVA and Santander.

That acquisition, which led to Nabiax’s foundation, was financed by the original €285 million syndicated loan. But now, as the company’s portfolio has grown to 15 assets, further financing has been needed to support the growth and technological improvement of two of the company’s data centres in Madrid.

The expanded €320 million financing carries another twist and is structured with ‘sustainable finance’ features. Through the deal, in which BBVA has been the sustainability coordinator, Nabiax will receive a margin reduction of up to 5 basis points should it hit sustainability targets, which include two environmental goals and a social key performance indicator related to gender equality.

Real Estate Capital caught up with Iván Paja, the company’s chief financial officer, to talk about the availability of finance for data centres in Spain and its latest financing’s sustainability credentials.

How easy/tough was to make Spain’s biggest data centre financing even bigger?

Paja: ‘The financial strength of Nabiax’s investors and tenants have allowed it access to a healthy pool of funding options since inception’

The fact that we are backed by Asterion Industrial Partners and Telefónica Infra has led us traditionally to enjoy a healthy pipeline of financing options. Spain’s financial institutions are normally keen to back any infrastructure/real estate project that is led by a strong and stable business, which is backed by a financially sound shareholders base.

However, more broadly, financial institutions in Spain, and more specifically Spanish banks, are still getting to know the sector. Because it is an emerging sector in the country that they do not fully understand, they remain conservative in their approach.

Proof of this caution was the fact that we had to source a syndicated loan with 12 different banking institutions. In the UK, for instance, we may have easily sourced the same amount of debt just from a couple of lenders, but we decided still to go for Spain-based banks given they offered us the flexibility we needed to fund our business plans.

What lending terms are being offered in the sector in Spain?

Data centres financing normally require high leverage, which normally represents x5/6 times the EBITDA. This is what banks in Spain are typically providing us, which is in line with the market’s terms. The reason for this high gearing is the fact that data centres require huge amounts of investment before they start generating EBITDA but also that the sector is in a growth momentum.

Data centres require huge amounts of capital expenditure, which starts with the many sources of back-up power, generators and uninterruptable power supply equipment, batteries [and other expenditures].

Would you say covid-19 has been a catalyst for the sector in Spain?

The covid-19 lockdowns across much of the developed world have further fuelled the sector as home working and shopping, e-commerce and remote entertainment have all added to demand. In Spain, more specifically, the pandemic crisis has definitely triggered the sector’s take-off. Since 2020, the sector has been rapidly growing. In 2021 alone, Nabiax has experienced 40 percent annual growth.

Is lending appetite also growing in the country?  

Since Nabiax’s foundation in 2019, lenders’ interest to fund our projects has grown. The main reason is the fact that now we are the leading market player in the country. We have strong cashflows and a clear growth strategy.

In addition, we are now also backed by Telefonica Infra, which owns 20 percent of Nabiax. [This] further boosts lenders’ confidence in providing us with finance. Another aspect behind lenders’ increased appetite to back us is the fact that, since 2020, major global hyperscale customers, including Google and Microsoft, are among our tenants. When we sourced the first debt tranche from our syndicate of commercial banks in 2019, we were just starting with the business, so the process of sourcing debt was a bit more tedious.