Equinix, GIC, and CPP Form $15B Data Center JV
The focus is to provide more data center capacity for AI and cloud growth.
Equinix, which provides digital infrastructure to its clients, announced a joint venture with Singapore’s sovereign wealth fund, GIC, and CPP Investments, which manages the global investments for the Canada Pension Plan Fund. Equinix is a publicly traded REIT with an approximate market capitalization of $84.2 billion, the largest REIT focused on data centers.
They plan to raise at least $15 billion to boost the deployment of Equinix’s xScale data center portfolio. The systems let hyperscale companies — those with demanding and large cloud services — to more easily add capabilities at the Equinix data centers they use. According to a press release, at full buildout the JV will almost triple the amount of capital available to the xScale program.
Equinix expects the JV ultimately to purchase land and build enough data centers to add more than 1.5 gigawatts of computing power in the U.S. With the growth of computing-hungry generative artificial intelligence, having more capacity at hand is critical for the AI vendors to succeed. OpenAI, which has changed from a non-profit to a for-profit organization, just raised $6.6 billion with Microsoft and Nvidia both investing at a potential $157 billion valuation, according to a Reuters report.
Equinix and GIC have cooperated in multiple joint ventures in the past in Asia, the Americas, and Europe. The introduction of CPP Investments, one of the 10 largest pension funds in the world, is notable not just for the amount of capital they can bring to a project, but the wide and deep sets of business connections it has throughout the world.
The structure of the agreement gives 37.5% equity interest to each of GIC and CPP Investments. Equinix will have the remaining 25% of equity. Each party has made capital investment commitments, although the details are not provided. The JV will use debt to add investible capital to eventually reach the $15 billion figure.
The closing of the joint venture is expected to happen by the end of calendar 2024. The entity needs various regulatory approvals.