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M&A: KKR Acquires Cooling Expert CoolIT Systems; Emphasizes Data Center Sustainability Strategy

May 3, 2023 by Joe Panettieri

Global investment firm KKR is acquiring CoolIT Systems, a provider of liquid cooling solutions for data centers, high-performance computing (HPC) environments, cloud service providers and even the desktop market.

This is M&A deal number 43 that we have covered so far in 2023. See all of the sustainable technology buyers, sellers & investors listed here.

As part of the deal, CoolIT will expand its equity ownership program to make all employees owners of the company. Financial terms were not disclosed.

CoolIT Systems: Sustainable Technology Focus

Kyle Matter, managing director, KKR

Take a closer look, and technology partners will notice that CoolIT Systems directly supports multiple United Nations Sustainable Development Goals -- including SDC 7 for affordable and clean Energy; 9 for industry, innovation and infrastructure; and 13 for climate action, according to the buyer.

CoolIT Systems, founded in 2001, develops Split-Flow Direct Liquid Cooling technology. The intellectual property is designed to "improve equipment reliability and lifespan, decrease operating cost, lower energy demand and carbon emissions, reduce water consumption and allow for higher server density than legacy air-cooling methods," the seller said.

Demand for CoolIT Systems' technology appears strong. One example: Revenue from commercial products and services for data centers grew 50% in 2022 vs. 2021, the company announced in early 2023. Still actual revenue and profit dollar figures are undisclosed.

CoolIT Systems, based in Calgary, Canada, previously raised funding from Vistara Capital Partners in January 2019. Financial terms of that deal also were not disclosed.

KKR, meanwhile, has a growing portfolio of sustainability-focused investments. Example holdings include pure-play sustainability consultancy ERM, which KKR acquired in May 2021.

KKR Buys CoolIT: Executive Perspectives

In a prepared statement about the KKR-CoolIT deal, CooIT CEO Steve Walton (pictured, top of page) said: “Our business has evolved tremendously over the past few years and today we are proud to be one of the most trusted providers of liquid cooling solutions to the global data center market. KKR shares our perspective on the significant opportunity ahead for liquid cooling. Having access to KKR’s expertise, capital and resources will put us in an even better position to keep scaling, innovating and delivering for our customers.”

Added Kyle Matter, managing director and head of KKR’s global impact team in North America: “Increasing, data and computing needs are on a collision course with sustainability considerations – the data center industry is expected to consume 8% of the world’s energy by 2030. As a firm, we have committed more than $17 billion to digital infrastructure since 2011 and deeply appreciate the mission critical role that it plays in enabling our economy. We also recognize that as a society, we are grappling with the enormous energy usage and related environmental impacts that are only expected to accelerate with the rise of AI and other high performance applications. We believe that liquid cooling has a critical role to play in helping to reduce the emissions footprint of our digital economy and we are thrilled to back CoolIT, a leader in this space.”

Evan Kaufman, director, KKR

Concluded Evan Kaufman, director at KKR: “By combining our manufacturing and decarbonization expertise with CoolIT’s track record of product innovation, we expect to further scale its best-in-class direct liquid cooling solution to meet the anticipated demand for higher density, more energy efficient data centers. Importantly, we look forward to working with Steve and the entire CoolIT management team to invest additional capital and resources into expanding its cooling solutions across new applications, customers and end markets.”

The deal is expected to close in the second quarter of 2023, subject to regulatory approvals and customary closing conditions, KKR said.

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