Calgary-headquartered CoolIT Systems, a leader in liquid cooling solutions for AI data centers, is on the verge of being purchased by Ecolab, a U.S.-based company, for a staggering $4.75 billion US. This deal is being touted as one of the largest tech transactions in the city’s history.
Upon completion of the acquisition, CoolIT’s 650 employees are set to receive substantial cash rewards, ranging from roughly one to over eight times their annual salaries. This significant announcement was met with jubilation by the workforce on Wednesday.
Jerin Varghese, an engineer at CoolIT since 2021, expressed his excitement over the life-changing money windfall, outlining plans to pay off his mortgage, invest, and provide for his family and parents. He also mentioned a well-deserved vacation with his wife on the horizon.
Established 25 years ago in a Calgary garage, CoolIT was acquired by global investment firm KKR in 2023, transforming its employees into business owners. The company also had Mubadala, a state-owned investment entity based in Abu Dhabi, as a minority co-investor.
With the surge in spending on data centers capable of handling intensive AI workloads like OpenAI’s ChatGPT, CoolIT found itself in a prime position to meet the escalating demand for liquid cooling systems essential for cooling server racks.
CoolIT now caters to hyperscalers and data center operators across more than 300 facilities globally, as per Mubadala. When the acquisition concludes later this year, CoolIT employees are anticipated to receive average payouts of around $240,000 US each, with long-serving staff potentially receiving at least $380,000 US.
In a statement, KKR mentioned that the sale is expected to yield approximately 15 times the original equity invested. Patrick McGinn, CoolIT’s president and COO, expressed optimism about the company’s future, foreseeing continued growth and collaboration with Ecolab to enhance operational efficiency and water conservation for customers.
Ecolab foresees CoolIT generating about $550 million US in sales in the next year. The company envisions a tenfold growth in the liquid cooling market over the next decade, citing the pivotal role of liquid cooling in enabling advanced computing driven by AI.
Despite concerns raised about water consumption by data centers, especially related to liquid cooling, McGinn acknowledged the issue and highlighted the potential for more water-efficient data center designs in the future. CoolIT’s innovative direct-to-chip cooling technology, capable of closed-loop systems, offers a solution to reduce water usage significantly.
Brad Parry, president and CEO of Calgary Economic Development, hailed the acquisition as a milestone for the city’s technology sector, signaling potential inflow of capital and underscoring Calgary’s growing prominence as a hub for tech innovation.
McGinn emphasized CoolIT’s remarkable growth trajectory, driven by investments in Calgary’s manufacturing systems and the surge in AI computing deployment in data centers. He dismissed concerns of an impending AI bubble burst, citing sustained demand for their hardware and systems from data center operators.
Anticipating continued expansion, McGinn expects CoolIT to keep recruiting more employees, predominantly from Calgary. Parry highlighted CoolIT’s success story, emphasizing that building a global company like CoolIT in Calgary showcases the city’s potential as a breeding ground for tech ventures.