dailynewsnblog
Calgary-based CoolIT Systems, a specialist in liquid cooling for AI data centres, is set to be acquired by U.S. company Ecolab for $4.75 billion US, in what’s being called one of the city’s biggest tech deals of all time.
As part of the acquisition, the company’s 650 employees will receive substantial cash payouts, ranging from approximately one year of annual pay to over eight years’ worth — a major announcement celebrated by workers on Wednesday.
Jerin Varghese, an engineer at CoolIT since 2021, said the money is “life-changing” for him and his family.
“I do have some plans on exactly what to do. Maybe pay off the mortgage, invest some money and, you know, take care of the family and parents,” he said, adding that a vacation with his wife was in order.
The 25-year-old company, which started in a Calgary garage, was acquired by global investment firm KKR in 2023, making its employees owners in the business. Abu Dhabi-based, state-owned investment company Mubadala also served as a minority co-investor in CoolIT.
That year, spending on data centres that can handle large AI workloads like OpenAI’s ChatGPT skyrocketed, with CoolIT positioned to capitalize on the overwhelming newfound demand of liquid systems needed to cool racks of servers.
Now, CoolIT serves hyperscalers and data centre operators across more than 300 facilities globally, according to Mubadala.
As the Wall Street Journal reported, when the sale closes later this year, CoolIT’s employees are expected to receive average payouts of around $240,000 US each, with the longest-serving employees potentially receiving at least $380,000 US, or eight times as much as their salaries.
Employees will also receive pre-paid personal financial coaching and tax preparation services.
In a release, KKR said the sale will generate approximately 15 times the original equity it invested.
Patrick McGinn, president and COO of CoolIT, said the company’s future looks bright, and he isn’t expecting a slowdown anytime soon.
“We’re really excited to combine CoolIT’s liquid cooling technologies with Ecolabs’ water chemistry services and fluid management to create an operating system for our customers that is more efficient, that’s higher performance and, of course, allows us to help them save water,” he said.
Ecolab expects CoolIT to generate approximately $550 million US in sales over the next 12 months, according to a release.
Concerns about AI consuming massive amounts of water
According to an Ecolab presentation on the acquisition, the company expects the liquid cooling market to grow 10 times in the next 10 years.
Christophe Beck, Ecolab chairman and CEO, said in a release, “AI is transforming the demands on data centers, and liquid cooling is one of the critical technologies that makes advanced computing possible.”
But several Albertans across the province have raised concerns about how much water data centres consume, especially when it comes to liquid cooling.
Calgary’s renewed water restrictions had social media users speculating if AI is to blame. CBC’s Helen Pike breaks down the facts.
McGinn acknowledged the criticism, adding that “water is a major concern. It’s a big topic in the industry today and … the way that water has been used in data centres in the past is not the way that water needs to be used.”
He said new data centres can be built to use less water, and he hopes that’s true going forward.
He suggests CoolIT’s direct-to-chip cooling technology can be applied within closed loop systems, rather than open systems, which can use immense amounts of water.
Is Calgary’s economy shifting to AI?
Brad Parry, president and CEO of Calgary Economic Development, said “it’s an amazing story … to have that kind of a technology company get bought for that kind of a price. I mean, it’s probably the biggest tech deal in our city.”
He expects the deal to be the start of more capital flowing into the city, as it sends a message to the world that Calgary is a place where businesses can scale up to become globally competitive.
Over the last two to three years, McGinn said CoolIT has grown as an organization, in large part because of “the investment that’s come into Calgary and our manufacturing systems here, along with the boom in AI computers being deployed into data centres.”
Revenue has improved four times, he said, and profits have increased 10-fold.
And while many companies are benefiting from the overwhelming demand for AI, critics have speculated whether an AI bubble burst is to be expected.
McGinn is not deterred.
“We don’t see an AI bubble in our business right now,” he said. “Our perspective as suppliers of hardware and systems to data centre operators is that the demand is significant and continues to increase. And so for us and in our business it feels like growth will be continued for quite a while.”
McGinn said he expects to see CoolIT continue to hire more workers, many of them Calgarians, adding that the company currently hires five to 10 people per week on average.
Parry said while the AI boom is happening “right now,” a company like CoolIT has been successful for decades, starting out with building cooling systems for consumer gaming products.
“It’s just another proof point that you don’t have to leave Calgary to build and scale a global company. And that’s what’s exciting about it.”
