What is driving digital infrastructure growth, and how are the trends shaping credit assessment and financing structures?
Chip Wadsworth: Artificial Intelligence – AI – is the simple answer. Since OpenAI stepped into the public domain a couple years ago, AI has become the primary driver of digital infrastructure expansion, backed by massive capex. Hyperscalers such as Google, Meta and Oracle have committed hundreds of billions of dollars to AI model training and inference. And even with the introduction of an open source model like Chinese-based DeepSeek, which calls into question the quantum of spend, the dynamics behind Artificial Intelligence will power digital infrastructure over the long term.
While AI has driven recent trends, we can’t forget about the importance of the Cloud, which has been the backbone of digital infrastructure spend for decades. The Cloud will continue to be a critical factor going forward.
Nanda Kamat: One of the biggest trends we’re seeing is data centers shifting away from pure real estate deals toward project finance structures – thanks to their predictable, contracted cash flows.
How is market volatility impacting digital infrastructure and data center clients?
Chip Wadsworth: 2025 was shaping up to be a banner year for data center IPOs, with five to seven companies lined up to debut, but heightened market volatility has prompted potential issuers to pursue alternative funding sources – ABS, balance-sheet financing or project finance.
When Data Center issuers decide to enter the public market, we are confident that demand for those companies will be robust. They are large, growing, stable and important components of the global economy. The biggest challenge will be to de-lever their balance sheets to meet investor expectations. We have done a lot of work with the buyside to determine optimal leverage levels, and we have received very constructive feedback during our conversations.
“When Data Center issuers decide to enter the public market, we are confident that demand for those companies will be robust. They are large, growing, stable and important components of the global economy.”
Chip Wadsworth, Head of Technology, Media, Telecom, Equity Capital Markets
Nanda Kamat: Project finance has become a steadier alternative to equity or leveraged debt—even as base rates rise. Volatility is driving sponsors to make real-time decisions around which market is going to offer the best execution at the best price. For example, instead of tapping a costly ABS market, one client opted for an RBC securitization warehouse to refinance its stabilized assets.
Development companies (DEVCOs) are also becoming popular: A lot of sponsors like DEVCOs because it gives them the optionality to put financing in place and then move assets in and out.
Marcos Torres: RBC is deploying a significant amount of balance sheet capital into the sector. We've got, across the board, $125 billion capital in the U.S. (this is in addition to our City National Bank balance sheet), and of that, about $15+ billion is in the CME sector, which includes digital infrastructure. And that is the highest growing part of that loan book. A lot of capital is going there.
Moreover, geopolitical dynamics are influencing cash flows and risk assessment. When people are thinking through what platforms they finance and where, it’s becoming incredibly more complicated.
How are partnerships proving most effective and unlocking capital for digital infrastructure expansion?
Nanda Kamat: Strategic partnerships are emerging in the data center space to also address the enormous capital needs in this sector. For example, sponsor-backed data center platforms, where major private equity firms invest in these platforms, immediately unlocks substantial capital for developers.
There is also an increasing trend of hyperscalers partnering with power producers and developers to create behind-the-meter solutions. Partnership helps tackle one of the biggest issues facing data center developers: the availability of power.
“Partnership helps tackle one of the biggest issues facing data center developers: the availability of power.”
Nanda Kamat, Global Head of Project Finance
Moving on to energy transition: What is the latest update on AI applications and how we see their influence on digital infrastructure going forward?
Chip Wadsworth: Agentic AI – technology that optimizes business processes – has moved from theory into action. It’s becoming ubiquitous in the way it’s being deployed, and it dovetails back to why we’re so positive about the sector. In this space, you have to have that infrastructure in place to allow those applications to flourish.
Nanda Kamat: Power remains one of the most complex challenges for data centers. Speaking with multiple power developers and utilities undertaking multi-billion-dollar green-field projects, you can see firsthand how data center growth is driving an unprecedented surge in energy demand. Demand for data centers isn’t going to go away any time soon. The discussions around power and digital are converging.
Where's RBC seeing the greatest opportunity for growth and differentiation across digital infrastructure, and how are we positioned to lead in the next wave of investment?
Chip Wadsworth: For companies considering an IPO, the key message is threefold: prepare early to control your IPO timing, proactively build relationships with investors through non-deal roadshows and conferences, and be ready to pivot to private alternatives if the public market isn't favorable.
Strategies like developing relationships with buyers that ultimately participate in an IPO are critical to creating successful outcomes.
Leading the next wave of investment, RBC focuses on both the issuer client and its financial sponsor. Helping companies secure long term financing while assisting sponsors as they pursue liquidity at the tightest possible discount, unleashes more opportunity for the investment cycle to work.
Marcos Torres: RBC has bankers across the globe focusing on digital infrastructure, with very deep domain expertise and product knowledge. The idea is to deliver very specific and tailored financing solutions. We cross-collaborate. Our goal ultimately is to make sure that we leverage our intellectual capital to help fuel that growth.
During the AirTrunk transaction we worked with our Australia team – and across the globe with RBC offices and product partners – to get that super-complicated multi-jurisdiction financing, in-data infrastructure completed.
RBC’s goal ultimately is to make sure that we leverage our intellectual capital to help fuel that growth.
Marcos Torres, Global Head of Media, Communications and Entertainment
Nanda Kamat: RBC’s commitment is to provide clients with the best advice regardless of product, across its broad platform and capabilities. We always advise clients not to be dependent on just one pool of capital; get to know the ABS investors, the banks, the private placement players, because in the end you’re going to need multi-market solutions to finance this volume of need.
We can take a company private, finance all of their growth CapEx needs through ABS or project finance, and then take them public. It’s really a full lifecycle.
