Colony Capital has acquired Digital Bridge Holdings for $325 million as part of Colony’s strategic evolution into the leading owner and investment manager of assets, businesses and investment management products in which the digital and real estate frontiers intersect.
The Digital Bridge acquisition follows the May 2019 final closing of Digital Colony Partners, a $4.05 billion fund sponsored by Colony and Digital Bridge. Digital Colony Partners is dedicated to global opportunities in digital infrastructure and is the largest first-time institutional fund of this type.
This acquisition continues Colony’s strategy of building leading investment management platforms, adding a powerful focus on assets and businesses that benefit from the increasingly digital world, including communications infrastructure, quant-driven listed securities products, artificial intelligence, digital credit products, smart logistics industrial, private equity and emerging markets infrastructure and growth equity strategies.
Digital Bridge manages nearly $20 billion of digital infrastructure globally, directly and through Digital Colony Partners, and pro forma for Digital Colony Partners’, pending Zayo Group Holdings‘ transaction. Combining this portfolio with Colony’s footprint, the merged firm will manage approximately $60 billion of assets. The company believes this concentration on digital infrastructure and related, digitally driven investment management businesses will be a highly compelling strategy to generate substantial and sustainable value for shareholders and is very complementary to recent initiatives in other growth areas such as emerging markets, energy and listed securities, often with a “new economy” emphasis.
The combination of the two companies also paves the way for Colony’s leadership succession plans, which will be implemented over approximately 18 to 24 months.
Following a transition period, Marc Ganzi, a founder and CEO of Digital Bridge, and a managing partner and an investment committee member at Digital Colony, will become the CEO of Colony, succeeding Thomas Barrack Jr., who will return to the position of executive chairman. Ganzi will focus with Barrack and the Colony board and executive team to continue Colony’s strategic plan of selling noncore assets, reducing G&A, growing investment management, generating liquidity and de-risking, and maintaining REIT status and a dividend — the further details of which will be announced before year end.
Barrack said, “Colony Capital was founded to pursue value-added investment opportunities in real estate and real estate operating companies and has been a pioneer across a myriad of real asset cycles, geographies, and platforms. As our experiential world gives way to a new future — a data-driven world — real estate in its current format with long-dated contractual revenue streams from traditional tenants will have to change and adapt or face substantial obsolescence. Data-driven decisions, shared space utilization, ‘everything-as-a-service,’ new communications networks, and last-mile delivery systems, are examples of new technologies which will disintermediate everything in their paths. In fact, location, location, location is giving way to connect, connect, connect. This pivot presents a new investable frontier across the globe for those who are armed with the proper resources and experience.
"Nine months ago when I returned to the CEO position,” he continued, “part of our plan was to ensure that our leadership and direction of the Company was positioned for dominance for the next decade. I have known Marc Ganzi for over two decades and have admiringly watched his progression and success as an entrepreneur, visionary, and as the leading operator and investor in the digital world. Since Marc founded Global Tower Partners in 2002, he has been at the forefront of trends in the digital world, capitalizing on the overwhelming integration of mobile connectivity into the global economy and delivering remarkable returns for his investors in the process. He is an exceptional choice to lead our combined companies, investors, and employees as we accelerate, streamline, and cull other Colony business lines through sale or joint ventures and continue to reduce corporate costs. We will utilize the transition period to prepare Marc to assume the CEO role as he executes on our digital plan. Together we will continue to grow and expand our digital, credit, and investment management platforms while realigning and redirecting our hospitality and healthcare verticals.”
