Australian Super has made one of the biggest deals in data center investment by any state-owned investor, with its EUR1.5 billion (US$1.6 billion ) investment in Vantage Data Centers.
According to the Financial Times, Vantage Data Centers has 12 data centers spread across various European cities. The public pension fund is also planning to deploy more capital into Vantage when it requires more funding. Presently, the developer is building two more data centers in London costing GBP750 million (US$804 million).
Vantage Data Centers is part-owned by DigitalBridge, which has previously drawn sovereign investor capital. In July, another Australian superannuation fund, Aware Super, invested in partnership with DigitalBridge, committing around US$500 million in Switch, a US-based renewables-powered data center platform. The transaction was the fund’s first investment in the data center sector.
Partnerships with data center providers have stimulated investment in the sector by state-owned investors. Altogether, SOIs have plunged US$15.6 billion into the sector over the past four years.
DigitalBridge has recently boosted sovereign capital in the sector. In May, it forged a new partnership with the Saudi sovereign wealth fund Public Investment Fund (PIF), aiming to develop data centers in Saudi Arabia and across the Gulf Cooperation Council (GCC). PIF has been an important investor in digital infrastructure, investing in Zain’s Saudi towers unit, bid to takeover STC's Tawal tower unit. It marked a major move by DigitalBridge into the Middle Eastern market.
SOIs have also formed partnerships with other data center providers. Data center investments included Ontario Teachers’ Pension Plan’s (OTPP) participation in a consortium with Brookfield Infrastructure Partners to acquire Texas-based Compass Datacenters at a company valuation of US$5.7 billion. Compass Datacenters designs and constructs data centers for some of the world’s largest cloud services providers and organizations on campuses primarily in North America and EMEA.
Strategic concerns prompted India’s National Investment and Infrastructure Fund (NIIF) to announce a partnership - Digital Edge DC - with Singapore’s Digital Edge and AGP DC InvestCo to develop a pan-India portfolio of hyperscale data centers. It is starting with a US$2 billion investment in one of the country’s biggest facilities, a greenfield 300MW hyperscale facility in Navi Mumbai. The NIIF-backed platform is expected to provide a competitive advantage to India’s economy in the long run. Moving forward, Digital Edge DC will continue to capture the demand of the market via investing heavily in more data centers, as aligned with its strategy to further build its cloud standing.
India’s potential has attracted a raft of other funds in tech-oriented real estate. In February, Ivanhoé Cambridge – the real estate arm of Canadian pension fund CDPQ – and Singaporean state-owned investor Temasek’s Mapletree backed a INR150 billion (US$1.8 billion) tech-focused Indian real estate platform. In what is expected to become the largest investment platforms in the Indian real estate office sector, properties and projects were identified in the bid to establish high-quality offices in the major cities throughout India. For its part, Ivanhoe Cambridge is bringing in its expertise and experience as an institutional investor while Mapletree will be offering its property management services.
While Europe and the GCC have received attention of these investors, Developed Asia is a major focus owing to the scale of the market and sheer growth potential. Last November, the Abu Dhabi Investment Authority (ADIA) teamed up with Singapore’s SC Capital to establish a data center platform, which was set to reach US$2 billion in equity. The platform is investing in Developed Asian economies, where state-owned investors have focused much of their attention in data center investments. ADIA previously became the largest investor in Gaw’s internet data center platform’s US$1.3 billion fundraise in 2020, enabling it to expand into new Asian markets beyond China.
South Korea is a notable target for growth. According to IDC Korea’s “Korea Cloud IT Infrastructure Market Forecast”, the Cloud IT infrastructure market in Korea is expected to reach approximately US$1.86 billion in sales by 2025. In January 2022, GIC and Equinix signed a US$525 million 80:20 joint venture to develop and operate two xScale data centers in Seoul. In March 2022, Canada Pension Plan Investment Board (CPP Investments) and Pacific Asset Management Company (Pacific) announced a KRW200 billion (US$150 million) 69:31 joint venture to develop the largest carrier-neutral hyperscale data centre, Jukjeon Data Centre.
Singapore also stands out as a focus of attention and is ranked joint second with Silicon Valley among data centre markets globally, according to Cushman & Wakefield’s 2022 Global Data Center Market Comparison. In February, Abu Dhabi sovereign fund Mubadala made a US$350 million equity investment in Princeton Digital Group (PDG), a Singapore-based pan-Asia data center operator. PDG's existing shareholders – New York-based private equity firm Warburg Pincus and OTPP – made follow-on investments as well, lifting the combined investments for the funding round to more than US$500 million. The company currently has 600MW of capacity in operation or under development, with 20 data centers in 14 cities across five countries in the Asia-Pacific region. With its latest equity infusion, PDG plans to add at least another 200MW of capacity by 2024 and by 2027 aims to have an additional 10-20 data centers and double its current capacity.
