Spark New Zealand (ASX:SPK, NZE:SPK) agreed to sell a 75% stake in its data center business to Pacific Equity Partners (PEP), valuing the operation at up to NZ$705 million, according to a Tuesday filing with the New Zealand and Australian bourses.

PEP's secure asset fund, which invests in infrastructure growth platforms, will provide the company with NZ$486 million upfront cash and up to NZ$98 million more by 2027, subject to performance, the filing said.

The data center assets will be transferred to a new independent entity, DC, with its own board, management, and non-recourse debt, the filing added.

The funds will be used to reduce group net debt, with the transaction subject to regulatory approvals and expected to close by Dec. 31, per the filing.