Rendering of the SL2x xScale data centre in Seoul, which was developed by an Equinix-GIC JV (Image: Equinix)
Singapore sovereign giant GIC, the Canada Pension Plan Investment Board (CPPIB), and US-based data centre provider Equinix have formed a joint venture to develop data centre campuses in the US, with the partners targeting to raise over $15 billion to fund the construction of hyperscale facilities that will eventually provide more than 1.5 gigawatts of capacity.
Under the terms of the agreement announced Tuesday, GIC and CPPIB will each hold a 37.5 percent interest in the JV, with Equinix taking the remaining quarter stake. In addition to the partners’ equity commitments, the venture also expects to take on debt to raise its total investable capital to more than $15 billion over time.
The JV marks the latest investment in the digital infrastructure space by Equinix’s partners, with GIC having previously teamed up with the NASDAQ-listed player for data centre ventures in Asia Pacific, Europe, and the Americas. CPPIB last month announced that it had teamed up with Blackstone in the $16 billion acquisition of Australia-based data centre platform AirTrunk.
“We are proud to expand our years-long partnership with Equinix, addressing a massive and growing demand for digital infrastructure, driven by the rapid advancement of technology, including AI,” Goh Chin Kiong, GIC’s chief investment officer of real estate said in a release. “GIC’s capital and scale, paired with Equinix’s operational expertise, has driven meaningful value across our investments together. Through this joint venture, we look forward to providing the funding needed to develop state-of-the-art digital infrastructure across the US alongside our like-minded partner, CPP Investments.”
CPPIB Boosts Portfolio
At full buildout, the JV will nearly triple the investment capital of Equinix’s xScale hyperscale data centre program, with the partners aiming to use the fresh cash to purchase land and develop new facilities capable of supporting over 100 megawatts of capacity per campus.
Goh Chin Kiong, GIC’s CIO for real estate
The JV is the first partnership between CPPIB and Equinix, with the Canadian pension giant pointing to the investment as helping to meet growing demand for digital infrastructure on the back of increasing artificial intelligence and cloud adoption, as well as delivering strong returns.
“CPP Investments has invested in data centres for several years and we have developed strong expertise in this space,” said Max Biagosch, global head of real assets and head of Europe for CPPIB. “This investment will help meet the increasing demand for data centres driven by rapid technological advancements and marks a significant step forward in our broader data centre strategy. We are pleased to partner with Equinix and GIC to deliver strong long-term risk-adjusted returns for the CPP Fund.”
The JV will be set up in the form of a limited liability partnership and is subject to regulatory approvals, which the partners expect to receive in the fourth quarter.
The partnership adds to a growing portfolio of data centre investments by CPPIB, which in last month’s AirTrunk acquisition agreed to acquire a 12 percent stake in the data centre operator in a deal valuing the company at A$24 billion. AirTrunk develops and operates data centres across Asia Pacific, including Australia, Hong Kong, Japan, Malaysia and Singapore.
In 2022, CPPIB formed a JV with Seoul-based Pacific Asset Management to develop the largest carrier-neutral hyperscale data centre in South Korea. The Toronto-based institution also has a venture with Japanese trading firm Mitsui & Co to build hyperscale facilities in Japan and a partnership with entities of Singapore’s Keppel Group (now Keppel Ltd) to develop data centres in Asia Pacific and Europe.
GIC-Equinix Expansion
The JV is the latest in a series of tie-ups between GIC and Equinix to develop and operate hyperscale data centres, including a $525 million Korean venture inked in 2022 and a $1 billion Japanese JV formed in 2020. GIC owns an 80 percent stake in both of those vehicles.
Outside of Asia, the pair have a $1 billion European partnership, while GIC in 2021 pumped an additional $3.9 billion into Equinix’s xScale platform to help fund the portfolio’s global expansion.
In addition to GIC and CPPIB, Equinix has also partnered with US fund manager PGIM Real Estate on data centre projects, including a $575 million Australian joint venture which opened its first Sydney xScale facility in 2022, as well as a $600 million US JV inked in April.
During this year Equinix has expanded its footprint across Southeast Asia and India, with the company having acquired a trio of assets in the Philippines after announcing plans for its fifth Indian data centre project in Chennai.
The company’s existing hyperscale JV portfolio in Europe, Asia Pacific and the Americas has a committed investment of over $8 billion, which is expected to provide over 725 megawatts of capacity across more than 35 facilities globally at full buildout, according to Equinix.
“As the world’s leading companies build out their infrastructure to support key workloads such as artificial intelligence, they require the combination of large-scale data centre footprints optimized for AI training and interconnection nodes for the most efficient inferencing,” said Adaire Fox-Martin, CEO and president of Equinix. “Our xScale and (International Business Exchange) offerings are uniquely positioned to address this business need, enabling companies to realize the powerful potential of AI.”
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