U.S. Data Center Investments Roll On: Equinix Adds $15B JV for Hyperscale Expansion; Morgan Stanley Funds Flexential
Back in April 2024 Equinix pushed its global data center portfolio to over $8 billion with the announcement of a $600 million joint venture with PGIM Real Estate, the real estate investment and financing arm of PGIM, Prudential Financial's global asset management business.
This was the second joint venture between the two companies, though it marked the first investment made through PGIM Real Estate's dedicated global data center strategy, managed on behalf of third-party clients, to invest exclusively in hyperscale facilities.
This early 2024 investment took Equinix to more than 35 data centers globally and more than 725 MW of power capacity for its customers.
But this October’s announcement from Equinix on their latest joint venture makes April’s announcement look small, with the news of a joint venture (JV) agreement, subject to closing conditions, in the form of a limited liability partnership with GIC and Canada Pension Plan Investment Board (CPP Investments), and a plan to raise more than $15 billion (USD) in capital.
The plan is to take advantage of the artificial intelligence (AI) market and demand for cloud data centers to add to the existing Equinix footprint. It is expected that the joint venture will nearly triple investment capital in the Equinix xScale program, providing interconnection and edge services that tie into the existing hyperscaler connections at Equinix facilities.
The long-term goal is to eventually add more than 1.5 GW of capacity by building multiple 100 MW+ campuses in the US to service the Equinix hyperscale customer. This would involve the purchase of new land for these campuses, not simply increasing capacity at existing sites.
As Adaire Fox-Martin, CEO and President of Equinix, stated in the JV announcement:
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 center footprints optimized for AI training and interconnection nodes for the most efficient inferencing. Our xScale and IBX offerings are uniquely positioned to address this business need, enabling companies to realize the powerful potential of AI.
And, as we have seen in the spate of earlier announcements from a variety of partnerships, joint ventures, and data center operators, the focus in infrastructure investment in 2024 has been on building to support current and future demand for AI and HPC capable data centers and interconnection.
Both Goh Chin Kiong, Chief Investment Officer, Real Estate at GIC, and Max Biagosch, Senior Managing Director, Global Head of Real Assets & Head of Europe for CPP Investments, admitted the importance of of building infrastructure to support the rapid technological changes being seen in the data center space, with Goh commenting:
Through this joint venture, we look forward to providing the funding needed to develop state-of-the-art digital infrastructure across the U.S. alongside our likeminded partner, CPP Investments.
Each partner in the JV has committed equity to the project and is expected to take on debt to, over time, raise the investment capital pool to over $15 billion.
Equinix will have a 25% equity interest, with GIC and CPP each taking on 37.5%. Pending the receipt of the required regulatory approvals, the closing of the JV is expected by the end of 2024.
The xScale joint venture with GIC and CPP Investments, which will see a minimum investment of more than $15 billion over the next decade and beyond, is an example of how Equinix and its partners understand how important AI and the infrastructure to support it is to the future of the digital economy, cloud computing, and other data-intensive technologies that require massive amounts of rapidly scalable sustainable digital infrastructure.
Flexential Continues its Growth with Investment Partners
Flexential, who currently has 42 data centers in their portfolio, connected over a 100 Gbps backbone and with 325 MW of planned capacity as they continue development, has announced a new strategic investment from Morgan Stanley Infrastucture Partners (MSIP).
MSIP, a private infrasture investment platform within Morgan Stanley Investment Management, is partnering in data center plans with Flexential's existing investor GI Partners. Regarding his firm focusing on the demands of supporting future technological development, Christopher Ortega, Head of Americas, MSIP, said:
We believe Flexential's robust next-generation infrastructure, commitment to innovation, and proven leadership in the industry make it well-positioned to capitalize on market opportunities. We look forward to supporting the company's continued growth and success in the years to come.
MSIP and GI Partners will be co-control investors, though the size of the investment was not announced, only that “they will provide a substantial amount of primary capital to fund continued expansion and growth.”
Chris Downie, Flexential's CEO, talked about the importance of this new investment in allowing his company to continue development and meet customer demand, saying:
As we continue to invest in expanding our infrastructure and delivering innovative solutions to our customers, this additional investment will enable us to build on our recent successes and further strengthen our position as a leader in the data center and digital infrastructure industry.
Locally and Globally, the Rush to Invest Continues
As we continually report on, the rush to invest in data center, cooling, and power infrastructure continues unabated. While the investment process may seem circular, all of these industries are creating and feeding the demand that business and consumers are placing on the next generation digital infrastructure.
