GIC and Equinix Expand Hyperscale Data Centre JV to Korea with $525M Deal

Singaporean sovereign wealth fund GIC and US data centre firm Equinix have agreed to form a $525 million joint venture to develop and operate two hyperscale facilities in South Korea, following similar initiatives in Europe and Japan.

The pair of data centres in Seoul, to be named SL2x and SL3x, will be part of the Equinix xScale series and are expected to provide more than 45 megawatts of power capacity to serve the needs of hyperscale companies, including the world’s largest cloud service providers, Equinix said Wednesday in a release.

GIC will own an 80 percent equity interest and Equinix the remaining 20 percent in the new JV, which will bring Equinix’s xScale data centre portfolio to 36 facilities globally with an expected power capacity in excess of 720MW.

“More and more organisations 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,” said Equinix president and CEO Charles Meyers. “Korea and the broader Asia-Pacific market are both enablers and beneficiaries as organisations prioritise digital transformation.”

Strategy Redux

The Seoul facilities will align with Equinix’s Future First sustainability scheme and its goal to use strictly renewable energy sources, the Silicon Valley-based firm said, noting that it has operated with 100 percent renewable energy in South Korea since 2020.

NASDAQ-listed Equinix entered the Korean market in 2019 with its SL1 data centre under its International Business Exchange platform, which operates smaller facilities aimed at co-location and other requirements. The existing Seoul facility lets customers connect their corporate IT infrastructure to hyperscale cloud providers like Alibaba, Amazon, Google, Microsoft and Oracle.

Once the JV deal closes this quarter, GIC and Equinix will look to reprise a strategy introduced in 2019 when the partners formed a $1 billion joint venture to build and operate hyperscale data centres in Europe.

Equinix sold a pair of data centres in London and Paris to the Europe JV in exchange for its 20 percent equity stake in the entity, which is developing four xScale data centres in Amsterdam, Frankfurt and London.

In 2020, the partners set up a $1 billion Japan joint venture to which Equinix sold two under-development assets in Tokyo and Osaka in exchange for its 20 percent stake.

Equinix last June announced that GIC would inject a further $3.9 billion into the xScale data centre programme through a wave of anticipated JV agreements.

Digital Realty Powers Up

GIC is helping Equinix to up its game in South Korea as rival Digital Realty this week officially opened its first data centre in the country, a 12MW development spanning 22,000 square feet (2,044 square metres) in Seoul’s Sangam Digital Media City.

The debut of the carrier-neutral facility, dubbed Digital Seoul 1, comes after the world’s largest data centre trust paid $66 million last year to purchase a site for Digital Seoul 2 in Gimpo City, northwest of the capital.

Other data centre players betting on South Korea include Digital Edge, the Singapore-based operator backed by New York’s Stonepeak Infrastructure Partners, which last April announced plans to invest $120 million in a pair of data centres in the country.

In 2020, UK fund manager Actis set up a joint venture to develop its first server-hosting facility in South Korea, a $315 million project in Greater Seoul to be built with its partner, Korean conglomerate GS Group.

In a 2021 report on the most attractive places for building data centres, Dutch design consultancy Arcadis ranked South Korea 16th among all global markets.