Ares Hits $2.4B Final Close of Japan Data Centre Fund Backed by CPPIB, GLP

Ares Management has reached the final closing of a Japan data centre fund with total equity commitments of $2.4 billion, including $1.3 billion contributed by the Canada Pension Plan Investment Board.

Japan DC Partners I marks the US fund manager’s first-ever vehicle dedicated to data centre investment and development, Ares said Wednesday in a release. JDC I is the first strategy announced by Ares since its March acquisition of the ex-China funds business of industrial giant GLP, which is also invested in the new vehicle, while Toronto-based CPPIB is a longtime institutional partner in GLP’s Japan ventures.

The fund will support development of three data centre campuses in Greater Tokyo, with the facilities expected to deliver nearly 240 megawatts of IT load. Ares co-president Blair Jacobson said JDC I aims to address supply constraints in Japan’s data centre market amid rising adoption of AI and cloud computing technologies.

“As we work to introduce this next wave of critical assets, we are confident that the team’s longstanding relationships with key data centre customers and track record as reliable stewards of these assets will position us well as we seek to generate compelling risk-adjusted returns,” Jacobson said.

Bit Barns by Ada

The fund’s Tokyo campuses will be developed and operated by Ada Infrastructure, a global data centre platform acquired by Ares in the GLP transaction.

Ares anticipates further Japan data centre investments under JDC I, including execution of the firm’s secured pipeline. With its acquisition of GLP Capital Partners International, Ares gained immediate scale in Japan’s real estate market with $18 billion in assets under management, including $11 billion in perpetual capital vehicles.

CPPIB, which last year teamed with Blackstone on a $16 billion buyout of regional data centre platform AirTrunk, aims to capitalise on Asia Pacific’s surging need for data processing and consumption, said Max Biagosch, global head of real assets at the $524 billion pension fund.

“As one of the largest data centre markets in Asia, Japan acts as a key connection point between Asia and North America to facilitate efficient data transfer,” Biagosch said. “The commitment to the fund will further advance our global data centre strategy and deliver attractive risk-adjusted returns for CPP contributors and beneficiaries.”

The bet on digital infrastructure comes as Japan leads Asia Pacific in terms of capital requirements to complete its data centre project pipeline, with $35.4 billion needed for the country’s 2,678MW of capacity, according to Cushman & Wakefield. At the city level, Tokyo has the region’s biggest pipeline at 1,656MW.

Bulking Up in Asia

Ares has aggressively expanded its Asia Pacific footprint in recent years, first with the 2020 acquisition of Hong Kong-based distressed debt specialist SSG Capital and later with the 2023 purchase of Singapore-based private equity firm Crescent Point Capital.

The NYSE-listed company also joined PAG, CITIC Capital, the Abu Dhabi Investment Authority and Mubadala Investment Company last year in the $8.3 billion takeover of Dalian Wanda Group’s primary shopping mall management business.

Bloomberg reported in March that Ares had approached at least two banks with an offer to buy their holdings of debt issued by troubled Hong Kong builder New World Development.

The Los Angeles-based firm manages $546 billion in assets across the Americas, Europe, Asia Pacific and the Middle East.