As the infrastructure of the digital economy, data centers are proving to be high targets for state-owned investors (SOIs).
GIC’s announcement that it is extending its joint venture with Equinix has taken its exposure to the sector to another level, with an additional $3.9 billion pledged for the expansion of its xScale data center portfolio.
The partnership between the Singaporean sovereign wealth fund and the US-based data center giant expands on the US$1 billion joint venture signed last year for three data centers in Japan.
The structure of the new partnerships will remain the same with GIC owning an 80% equity stake and Equinix owning the remaining 20%. The joint venture projects are set to be concluded in stages over the rest of the year and will seek to develop and operate data centers to support the workload deployment needs of a targeted group of hyperscale companies, including the world's largest cloud service providers.
Data centers and cloud computing are the infrastructure of the tech revolution. Like conventional transportation infrastructure, the segment provides long-term income generation, yet exposure to tech ensures long-term growth in scale. Global SWF estimates that from 2017 SOIs have invested more than US$6 billion in data centers and cloud computing worldwide.
Other significant investments by SOIs this year include Canadian public pension fund CDPQ’s commitment last month to incremental equity financing for eStruxture, the largest Canadian-owned, cloud and carrier-neutral data center provider.
Last week, Indonesia’s new sovereign wealth fund INA indicated it is set to strike a deal in digital infrastructure to bolster the Southeast Asian nation’s digital revolution and marking an expansion from core infrastructure assets.
Global SWF’s 2021 Annual Report revealed that in 2020 40% of SOI investment in the sector was allocated to developed Asia with a further 40% devoted to emerging markets and the remainder in Europe and North America. GIC was the biggest investor in the sector, providing nearly a third of investment, mostly in its Japan joint venture. The venture followed on from a similar deal signed in 2019 by the partners for hyperscale data centers in Europe, indicating a long-term partnership in the sector.
Canadian pension fund OTPP has also sought to develop its exposure to data centers, having made a substantial allocation to Compass Datacenters in 2017. It led a US$ 360 million funding round for Singapore-based Princeton Digital Group which has built a portfolio of 18 data centers across four countries – China, Singapore, Indonesia, and India - and serves top hyperscalers, internet and cloud companies.
SOIs are also seeing the value of bolstering domestic data center infrastructure as a strategic national investment. Mubadala took a stake in UAE-based Group42, an artificial intelligence and cloud computing company, via the integration of Injazat and Khazna Data Centers. Meanwhile, Future Fund announced in early 2020 its first direct investment in data centers, having acquired a 24.1% stake in Canberra Data Centre.