DigitalBridge Group Transitions Focus to Private Equity, Announces Strong Money-Management Earnings
Published by Bloomberg
DigitalBridge Group, formerly known as Colony Capital, is undergoing a significant strategic shift, moving away from its data-center operations and focusing more on its private-equity business. This move aims to position the company as a major player in the alternative-asset management space, alongside well-known firms like Blackstone and TPG.
In line with this shift, DigitalBridge recently reported its financial results, showcasing impressive growth in its money-management earnings. The company's earnings in this sector saw a remarkable 36% increase year over year in the September quarter. This milestone comes after DigitalBridge exited its data-center business, allowing it to clear its balance sheet and fully concentrate on its potential in the digital infrastructure investment sector – an area that remains in high demand.
Leading the transition is CEO Marc Ganzi, who brings with him a wealth of experience in the digital infrastructure field. Before joining DigitalBridge, Ganzi successfully built and sold Global Tower Partners, enhancing his expertise in private equity. Under his leadership, DigitalBridge has divested from traditional real estate investments and significantly increased its fee-earning equity under management, solidifying its position as a key player in the digital infrastructure market.
Despite these positive developments, DigitalBridge's financials have been somewhat challenging to assess due to certain accounting practices. These practices required the company to report the debts and expenses of its controlled, but not wholly-owned, data-center operations. As a result, the company appeared more leveraged and less profitable than it actually was. However, recent changes and strategic divestments are expected to rectify this issue, providing a clearer view of DigitalBridge as a high-margin alternative asset manager.
Market analysts are optimistic about DigitalBridge's future prospects, valuing the company's asset management business, performance fees, and stakes in portfolio companies. Many believe that the company's stock may be undervalued, considering its potential in the growing digital infrastructure market. The upcoming quarters will be crucial for DigitalBridge as it aims to demonstrate its expertise in fund-raising and asset management, solidify its position as a top-tier alternative asset manager, and attract a reassessment by the market.
Analyst comment
Positive news: DigitalBridge Group has undergone a significant transition towards its private-equity business and is repositioning itself as an alternative-asset manager. It has seen a 36% increase in money-management earnings and has exited its data-center business to focus on digital infrastructure. Despite past difficulties in financial assessment, recent changes are expected to offer a clearer view of the company as a high-margin alternative asset manager. Analysts are optimistic about the company’s future and believe it may be undervalued.
Market prediction: With its strategic shift and strong growth in money-management earnings, DigitalBridge is poised to showcase its potential in the digital infrastructure investment sector. The company’s focus on alternative assets and its CEO’s track record in the field suggest it has the capability to attract funds and achieve its market potential. Therefore, the market outlook for DigitalBridge Group is positive, with potential for increased valuation and growth.
