Digital Edge Doubles Japan Capacity With Purchase of 5 Data Centres for $230M

Singapore-based Digital Edge has acquired five data centres in Japan for $230 million, nearly doubling the firm’s total capacity in the country to 38 megawatts.

With the transaction, the startup backed by Manhattan-based private equity shop Stonepeak added a further 5,000 cabinets and 18.5MW of capacity to its Japan platform. The five assets are located in Tokyo, Yokohama and Kobe, Digital Edge said Thursday in a release.

The seller of the data centres is Itochu-Techno Solutions, better known as CTC, an IT services company that will continue as an anchor customer across all five locations and work with Digital Edge to expand the business.

“Digital Edge is constantly looking for opportunities to continue expanding in Japan,” said Digital Edge chief executive Samuel Lee. “Looking at the enterprise adaptation of cloud services and CTC’s track record and reputation at delivering outsourced IT services, this strategic partnership is a win-win for not only CTC and Digital Edge, but also our customers.”

Greenfield Prospects

Under the terms of the deal, Digital Edge also acquired the underlying real properties at four of the five locations, with plans to pursue new greenfield opportunities to support the firm’s retail and hyperscale business in Japan.

The Singaporean outfit earlier this year snapped up two fully operational data centres in Tokyo to add 7MW of capacity in Asia’s second-biggest economy. The $1 billion platform was launched last year with the acquisition of a 12MW facility in Osaka and the formation of a strategic partnership with CTC on the Mejirozaka Data Center in Tokyo.

Tokyo’s co-location market is expected to reach $3.4 billion in size by 2026, achieving a five-year compound annual growth rate of 9 percent from 2021 to 2026, Digital Edge said, citing statistics from data centre consultancy Structure Research. Osaka’s market is forecast to become a $1.1 billion market over the same time horizon, with a five-year CAGR of 21 percent.

“Since Digital Edge’s inception, we have been committed to investing in Japan’s digital infrastructure to respond to the market demands in the greater Tokyo and Osaka regions,” said Digital Edge president Kei Furuta. “I am pleased to have this opportunity to crystallize a strategic partnership with CTC, as we look to continue operating, modernising and expanding these data centres with the latest technologies.”

Digital Dozen

With its latest Japan pickups and previous acquisitions in South Korea and Indonesia, Digital Edge has now amassed a portfolio of 12 data centres across Asia Pacific.

The firm added some executive firepower in August with the hiring of Yaniv Ghitis as chief investment officer, tapping the longtime JP Morgan dealmaker to oversee new market entry, M&A and investor relationships for the Asia-focused data centre platform.

Before joining Digital Edge, Ghitis was a senior member of JP Morgan’s investment team for 17 years, most recently serving as managing director and co-head of technology, media and telecom investment banking for Asia Pacific, based in Hong Kong.

During his time at the investment arm of JPMorgan Chase, the bank worked on deals with data centre developers like US-based Equinix and China’s GDS, Bloomberg reported in March.

In his role as Digital Edge’s finance chief, Ghitis is responsible for conducting due diligence and negotiations on prospective investment opportunities and expanding the platform’s capacity for the origination and execution of new transactions.