Private Equity Invests Heavily in Trades Supporting AI Data Center Boom
Private equity (PE) is increasingly investing in construction and engineering trades that support the rapid expansion of artificial intelligence data centers. According to PitchBook's Q2 Construction and Engineering report, PE activity in these sectors reached a record high with 529 deals in the second quarter—up 56.5% year-over-year. While deal values slightly declined from the previous quarter due to smaller transactions dominating, demand for infrastructure remains strong. Data center construction spending surged by 46% compared to June of last year, while non-data-center private nonresidential spending fell by 7.9%. Analysts note that high interest rates are not deterring investment in data centers as both capital and demand remain robust. The focus is on trades like HVAC, electrical work, plumbing, fiber optics, and directional boring—essential for electrification and cooling systems. Contractors working on data center projects report an average backlog of 11 months compared to the industry's 8.5-month average. Experts suggest that this trend is still in its early stages with significant potential for further growth.
