Data centers are the infrastructure of the tech revolution and Singapore’s sovereign wealth fund GIC is boosting the digital superhighways of Asia with more capital.
Like conventional transportation infrastructure, the segment provides long-term income generation, yet exposure to tech ensures long-term growth in scale – and Asian developed markets are a key focus.
This week, the US$744 billion fund agreed to plough US$420 million into a US$525 million South Korean joint venture with digital infrastructure company Equinix. The investment will develop and operate two xScale data centers in Seoul. The Singaporean investor has emerged as a major partner in Equinix’s development of a US$8 billion portfolio of 36 data centers, requiring 720MW of power capacity.
Global SWF’s assets database shows that GIC has invested more than US$2.2 billion in Equinix’s data centers in Asia and Europe. Its joint investments with the hyperscale data center operator include a US$1 billion joint venture in Japan in 2020, which followed a similar deal signed in 2019 for data centers in Europe.
Charles Meyers, President and CEO, Equinix, commented, "More and more organizations are embracing a digital-first strategy to scale their operations, enhance the experiences of their customers, and unlock the value of technologies like 5G, IoT, artificial intelligence and machine learning. Korea and the broader Asia-Pacific market are both enablers and beneficiaries as organizations prioritize digital transformation.”
Equinix says that the establishment of xScale data centers in Korea will allow hyperscale providers to add core deployments to their existing access point footprints at Equinix. The power demand will be served with sustainable energy and Equinix has operated with 100% renewable energy in Korea since 2020, providing GIC with an ESG angle to its digital infrastructure investment. Equinix, GIC’s favored partner in the segment, is the first in the data center industry to commit to reaching global climate-neutrality by 2030.
GIC is not the only state-owned investor to devote capital to the backbone of the tech revolution. This week, Russian data center firm IXcellerate completed a new round of US$190 million of financing to fund its expansion plans with backing from Abu Dhabi sovereign wealth fund Mubadala Investment Company, SberInvest, and the Russian Direct Investment Fund (RDIF). IXcellerate will use the proceeds of the new funding round to spearhead the expansion of its Moscow North and South campuses with total capacity of 86MW. The newest building, Moscow Three (MOS3) is due to launch in Q1 2022 and will offer 25MW.
Mubadala took a stake in UAE-based Group42 in 2020, an artificial intelligence and cloud computing company, via the integration of Injazat and Khazna Data Centers. In 2020, Mubadala’s stablemate the Abu Dhabi Investment Authority (ADIA) invested an estimated US$500 million in China’s Gaw Capital Internet Data Center.
Canadian public pension funds are prominent in the segment. Canadian pension fund OTPP 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.
CDPQ invested in Montreal-based eStruxture’s C$600 million financing round for data centers in Québec. Canada’s biggest public pension fund CPP devoted US$320 million to a joint venture with Mitsui, the Japanese Data Centre Development Fund, an investment platform for hyper-scale data centre developments in Japan. It had previously invested US$350 million in the Alpha Data Centre Fund (ADCF), managed by Keppel Capital's wholly owned unit, Alpha Investment Partners, in 2017.
Jimmy Phua, Managing Director, Head of Real Estate Asia Pacific, CPP Investments, said: "The COVID-19 pandemic has accelerated the demand for data centres globally. In Japan, the scarcity of developable sites near major urban areas such as Tokyo and Osaka and intense capital needs have presented further challenges in developing hyper-scale data centres."
Meanwhile, Australia’s Future Fund announced in early 2020 its first direct investment in data centers, having acquired a 24.1% stake in Canberra Data Centre (CDC).
The establishment of xScale data centers allows hyperscale providers to add core deployments to their existing access point footprints. GIC’s solid partnership with Equinix indicates it is buying into a single platform that can offer direct interconnection to their customers and strategic business partners, giving it exposure to rapid growth in Asian demand.
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