The convergence of real estate, technology, and infrastructure has reshaped investment strategies
The rise of digital infrastructure is reshaping industries and fueling global M&A activities, driven by a surge in demand for data centers and low-cost cell tower networks. With macro trends like digitalization and AI accelerating growth, investors are increasingly drawn to opportunities in this sector. These developments have created unprecedented opportunities for law firms with expertise in areas such as M&A, real estate, and technology.
Jonathan See, a partner and co-head of M&A and private equity at McCarthy Tétrault, says his firm is capitalizing on these trends. “We feel like we've got the leading practice on the development side, plus on the capital M&A side,” he says, emphasizing the convergence of real estate and infrastructure in projects like data centers. McCarthy Tétrault recently enhanced its capabilities by recruiting a seasoned infrastructure and energy expert, Maxine Ethier. “Our platform is only going to get better by having Max join us,” See notes, underscoring how her arrival strengthens the firm’s approach to evolving infrastructure investments.
Ethier’s career has spanned both global and domestic markets. Before joining McCarthy Tétrault, she was responsible for all legal matters at CPP Investments’ real assets division and previously led Baker McKenzie’s global infrastructure group. Her broad experience provides clients with insights into shifting capital flows. She says investors are looking at digital infrastructure because of “continuing demand growth and utilization growth,” with a need for scalable solutions that span everything from data centers to fibre networks.
A major driver of this trend is artificial intelligence. “AI is creating an increased demand, and…that…creates new technology and new usages, which will…keep snowballing the use of digital infrastructure,” Ethier explains. See concurs, noting that crypto, while distinct from AI, is also a significant force shaping the sector.
As digital infrastructure expands, it presents complex regulatory and sustainability challenges. Data centers require immense amounts of energy, making it difficult to integrate renewable sources. Ethier emphasizes that these facilities “can’t have any lapse of power,” complicating the transition to cleaner energy. Still, companies are working on long-term partnerships with green providers. While the immediate environmental impact may be high, Ethier says sustainable solutions will likely emerge over time. “It is going to be a short-term challenge… [but] this is only going to be a good news story in the long term,” she says.
Both See and Ethier stress the importance of regulatory support for growth. Ethier calls for more decisive action from Canadian authorities, warning that without such efforts, “Canada [will] lag behind other countries.” See adds that collaboration with government stakeholders is vital: “Having government support as another stakeholder in this growth industry is obviously key.”
McCarthy Tétrault’s expertise in navigating these transactions' regulatory and operational complexities is reflected in a series of high-profile digital infrastructure deals. The firm advised Brookfield Infrastructure on its acquisition, alongside Alecta, of a 49 percent stake in Telia Company’s tower business in Sweden. It also advised Brookfield on its purchase of Cyxtera Technologies (now Centresquare) in Florida and Compass Datacenters in Texas.
Reflecting on the evolution of data center deals, See says the focus has shifted dramatically over the past two decades. “Fifteen…years ago…data center deals were more in the real estate camp,” he explains. At that time, the infrastructure needs of projects took a back seat. However, infrastructure and technology considerations are central today, leading investors to take a more integrated approach. Ethier illustrates this shift by pointing to a recent investment in Australian data centre company AirTrunk, which she worked on at CPP Investments with Blackstone. The investors used infrastructure and real estate funds, requiring legal teams with a deep understanding of both.
The regulatory environment remains fluid, particularly in areas related to AI and cybersecurity. Ethier emphasizes legal counsel's importance in handling these emerging risks, noting that “clients… want a legal team that… understand[s] real estate and infrastructure investments… but also… how these are put together.” Issues such as foreign investment restrictions and data security have become increasingly significant as infrastructure projects grow in scope and sophistication.
Ethier says advisers need to apply creative problem-solving. “You’re constantly… trying to understand the commercial objective,” she says, particularly when drafting contracts for long-term projects.
Despite these challenges, See remains optimistic. He views the rapid pace of technological change as an opportunity to deliver innovative solutions to clients. “When different capital participants enter the market… the market will evolve and evolve quickly.”
