Blackstone just made its clearest bet yet on the thermal bottleneck choking AI infrastructure. On March 11, the firm's Blackstone Energy Transition Partners fund announced a definitive agreement to acquire a majority stake in Advanced Cooling Technologies, a Lancaster, Pennsylvania manufacturer that has been building heat pipes and two-phase cooling systems since before most hyperscalers knew they would need them.
The deal terms were not disclosed. What was disclosed: ACT's executive team, led by CEO and co-founder Jon Zuo, will stay in place and remain as shareholders. The transaction is expected to close in Q2 2026, subject to customary conditions.
This is Blackstone doing what Blackstone does. Find the picks-and-shovels company serving a market that is about to explode, buy it, and pour capital into scaling manufacturing before competitors can catch up.
ACT was founded in 2003 by Jon Zuo and Scott Garner as a thermal technology R&D firm. For two decades, it built its reputation on unglamorous, exacting work: designing heat pipes, phase change materials, cold plates, environmental control units, and composite thermal systems for defense contractors and aerospace primes. The company serves customers across data centers, space, defense, energy, electronics, and EV markets. That breadth matters. It means ACT's engineering bench has been stress-tested across thermal problems that most data-center-only startups have never encountered.
Mark Zhu, the Managing Director at Blackstone handling the deal, said ACT is "well positioned for accelerated growth given the increasing importance of thermal management amid rising power intensity and AI innovation." He added that Blackstone is "excited to partner with Jon and the entire ACT management team to support the company's continued technological leadership and expansion of their manufacturing capacity amidst record customer demand."
Record customer demand. That phrase does a lot of work. GPU racks are pushing past 100 kW. The next generation of Blackwell and successor chips will push further. Air cooling hit its ceiling years ago. Liquid cooling is no longer optional for anyone building at scale.
What separates ACT from the crowd of companies now rushing to slap "liquid cooling" on their marketing materials is the depth of their two-phase expertise. A standard single-phase liquid cooling loop pumps water or coolant over a hot surface and carries heat away. Two-phase cooling exploits the latent heat of vaporization: a working fluid evaporates at the heat source, absorbing far more energy per unit mass than a single-phase system, then condenses at a remote heat exchanger and returns. ACT's hybrid approach is particularly clever. Their pumped two-phase system uses an actively pumped liquid supply that feeds sintered copper wick structures on the evaporation surface, but isolates the evaporation wicks from the bulk liquid flow. This prevents flooding of the evaporator while maintaining a high liquid feed rate. The result: their systems have demonstrated removal of over 850 watts with pumping power below 1.0 watt using R245fa as a working fluid. That kind of thermal resistance at that kind of parasitic power cost is difficult to replicate without years of materials science and wick fabrication know-how.
Heat pipes, ACT's bread and butter, operate on the same two-phase principle but passively. The capillary action of the internal wick structure moves condensed fluid back to the evaporator with zero pumping power. ACT builds these across power ranges from 100 watts to 100 kW, which means they can address everything from edge deployments to the densest hyperscale racks coming online in 2027 and beyond.
Blackstone Energy Transition Partners is not a small operation. The fund closed BETP IV at its $5.6 billion hard cap in February 2025, roughly 33% larger than its predecessor. Across the platform, BETP has deployed approximately $23.5 billion of equity globally. The portfolio reads like a supply chain map for the AI power build-out: Trystar (backup power solutions), Lancium (grid access for data centers), Potomac Energy Center (a 774-megawatt gas plant in Virginia), Sabre Industries (utility infrastructure). ACT slots into this portfolio as the thermal management layer. Blackstone is assembling the full stack of infrastructure that AI compute requires, and cooling is one of the largest unsolved cost centers in the equation.
Zhu's background reinforces the thesis. Before Blackstone, he worked at Bank of Montreal's Energy and Infrastructure Group. At Blackstone, he has led or been involved with investments in Trystar, Sabre Industries, Kindle Energy, and the Potomac Energy Center acquisition. He sees power and thermal management as two sides of the same coin. He is right.
The global data center cooling market was valued at $16.84 billion in 2024 and is projected to reach $42.48 billion by 2032, according to Fortune Business Insights, representing a 12.4% CAGR. Other research firms peg the number even higher. The variation in forecasts reflects genuine uncertainty about how fast AI workloads scale, but the direction is unanimous. Every forecast points up and to the right.
The more interesting question is which cooling modalities win. Air cooling is being displaced. Single-phase direct liquid cooling is the current default for new high-density deployments. But two-phase cooling, the kind ACT specializes in, offers superior heat transfer coefficients and lower pumping energy. The tradeoff has always been complexity and cost. With Blackstone capital behind it, ACT can invest in manufacturing automation and process engineering to bring those costs down. That changes the math for hyperscalers evaluating their next-generation cooling architectures.
Private equity has been circling data center cooling for two years. Blackstone buying ACT will accelerate that trend. Expect more deals targeting thermal management companies with real engineering IP, not just system integrators reselling off-the-shelf cold plates.
ACT's defense and aerospace pedigree is a moat that pure-play data center cooling companies cannot replicate on short timelines. Years of SBIR contracts and mil-spec thermal work produced manufacturing discipline and reliability standards that translate directly to mission-critical data center applications. Devin Pellicone, who leads ACT's data center product development group, has been building that bridge between defense-grade thermal engineering and commercial hyperscale demand.
Blackstone paid an undisclosed price for a company that makes things that get very hot work properly. In five years, when every new data center rack ships with two-phase cooling as standard, that price will look cheap.