Equinix and GIC, Singapore’s sovereign wealth fund, have formed a partnership to develop a network of xScale data centres in Japan worth $1 billion.
This isn’t the first time Equinix has partnered with GIC to bring new data centres online, in 2019 the two companies signed an agreement to develop data centres in Europe. Those data centres began coming online late last year, but the company clearly wants to expand its partnership outside of Europe, with Japan in its crosshairs.
The three initial facilities in the joint venture – one in Osaka and two in Tokyo — will serve the unique core workload deployment needs of a targeted group of hyperscale companies, including the world’s largest cloud service providers. With these xScale data centres, hyperscale companies can add core deployments to their existing access point footprints at Equinix, enabling their growth on a single platform that can immediately span 55 global metros and offer direct interconnection to their customers and strategic business partners.
Rapid growth of the digital economy has driven increasing demand for global connectivity and hybrid multicloud solutions. For years, the world’s largest cloud service providers, including Alibaba Cloud, Amazon Web Services, Google Cloud, IBM Cloud, Microsoft Azure and Oracle Cloud Infrastructure, have partnered with Equinix to leverage its global platform of 210 data centres to directly connect to their strategic business partners and customers. As these companies continue to expand in Asia-Pacific, they require capacity at scale to match their internal compute, storage and edge cache requirements.
The initial three facilities included in the joint venture will provide approximately 138 MW of power capacity to the Osaka and Tokyo markets when fully built-out.
Under the terms of the agreement, GIC will own an 80% equity interest in the joint venture and Equinix will own the remaining 20% equity interest. The joint venture is expected to close in 2H 2020, pending regulatory approval and other closing conditions.
Upon closing of this joint venture, GIC is expected to have contributed cash to fund its 80% equity interest in the joint venture. Equinix is expected to have transferred its Tokyo TY12 and Osaka OS2 development assets, along with development rights and the land for an additional data centre in Tokyo, to the joint venture in return for a 20% equity interest in the joint venture and net cash proceeds in excess of US$100 million.
Financing for the joint venture is also expected to close in 2H 2020 and is anticipated to consist of a delayed draw term loan facility and a revolving credit facility. Proceeds from the delayed draw term loan facility are expected to fund a portion of the consideration paid to Equinix for the sale to the joint venture of TY12 and OS2 development assets, as well as to fund a portion of the planned development and construction costs for those assets. The revolving credit facility is expected to be available for working capital needs and other general corporate purposes of the joint venture.
Charles Meyers, President and CEO, Equinix, noted, “Hybrid and multicloud have emerged as the clear IT architecture of choice, and Equinix is continuing its efforts to satisfy both the interconnection and core workload needs of the top hyperscale and cloud companies powering this infrastructure. Following our successful partnership with GIC on the initial xScale data center joint venture in Europe announced last year, we are now continuing our partnership with the formation of a new joint venture in Japan. The new facilities under this JV will allow our hyperscale customers to streamline their continued growth, while strengthening Equinix’s leadership position in the cloud ecosystem.”
