The three initial facilities in the joint venture – one in
Rapid growth of the digital economy has driven increasing demand for global connectivity and hybrid multicloud solutions. For years, the world's largest cloud service providers, including
- The initial three facilities included in the joint venture will provide approximately 138 megawatts (MW) of power capacity to the
Osakaand Tokyomarkets when fully built-out.
- xScale data centers provide hyperscale companies with a differentiated value proposition from existing wholesale data center operators in two key areas:
- xScale data centers offer access to
Equinix'scomprehensive suite of interconnection and edge services. These services will tie into the hyperscale companies' existing access points at Equinix, thereby increasing the speed of connectivity to their existing and future enterprise customers.
- xScale data centers are engineered to meet the technical and operational requirements and price points of core hyperscale workload deployments. This enables hyperscale companies to consolidate core and access point deployments into one global provider to streamline and simplify their rapid growth.
Equinix® offers the most access points—the "on- and off-ramps to the cloud"—to the top global cloud service providers. As hyperscale companies scale their operations at Equinix, the ecosystem of nearly 10,000 enterprises and other companies currently operating at Equinixbenefit from increased opportunities to directly connect and operate in proximity to the largest global cloud operators. Japanis the third-largest economy in the world and a significant hub for regional interconnection. As one of the world's largest metro areas and a fulcrum of the Japanese economy, Tokyois home to a large concentration of global and regional corporate headquarters which form a critical mass of end-user customers with high demand for hyperscale services. Osakais centrally located, contains the second-highest concentration of businesses in Japan, and is a center for start-up companies and innovation. Both metros currently have constrained supply, yet are priorities for hyperscale growth, according to Structure Research. Equinixis a top data center provider in Japanwith 13 International Business Exchange™ (IBX®) data centers and more than 500 employees.
- In 2019,
Equinixand GIC announced the formation of a joint venture to develop and operate xScale data centers in Europe.
- Private connectivity between enterprises, strategic cloud service providers and network services is growing as a strategy of choice for businesses, as digital transformation fuels higher demand for localized digital services at the edge. According to the Global Interconnection Index, Volume 3, a market study published by
Equinix, interconnection bandwidth growth in Asia-Pacificis forecast to reach 3,825+ Tbps by 2022, which is 28% larger than Europe. The Cloud & IT Services segment in Asia-Pacificis forecast to grow at a 50% CAGR, outpacing all other regions globally, reaching a total bandwidth that is 49% larger than North Americaand 119% larger than EMEA by 2022.
- Under the terms of the agreement, GIC will own an 80% equity interest in the joint venture and
Equinixwill own the remaining 20% equity interest. The joint venture is expected to close in 2H 2020, pending regulatory approval and other closing conditions.
- Upon closing of this joint venture, GIC is expected to have contributed cash to fund its 80% equity interest in the joint venture.
Equinixis expected to have transferred its TokyoTY12 and OsakaOS2 development assets, along with development rights and the land for an additional data center in Tokyo, to the joint venture in return for a 20% equity interest in the joint venture and net cash proceeds in excess of US$100 million.
- Financing for the joint venture is also expected to close in 2H 2020 and is anticipated to consist of a delayed draw term loan facility and a revolving credit facility. Proceeds from the delayed draw term loan facility are expected to fund a portion of the consideration paid to
Equinixfor the sale to the joint venture of TY12 and OS2 development assets, as well as to fund a portion of the planned development and construction costs for those assets. The revolving credit facility is expected to be available for working capital needs and other general corporate purposes of the joint venture.
- Citi served as exclusive financial advisor to
Equinixin connection with this transaction.
Jabez Tan, Head of Research, Structure Research:
Japanis a strategic country for regional hyperscale expansion, and the demand for data center capacity in the Tokyoand Osakamarkets has outstripped supply. Through this new joint venture, Equinixand GIC will be a top provider of new data center capacity for the world's largest hyperscale companies seeking to expand in these two strategic markets – leveraging Equinixfor both their core workload and interconnection requirements. This expansion aims to accelerate the adoption of hybrid and multicloud architectures by companies throughout the region."
Charles Meyers, President and CEO, Equinix:
"Hybrid and multicloud have emerged as the clear IT architecture of choice, and
Equinixis continuing its efforts to satisfy both the interconnection and core workload needs of the top hyperscale and cloud companies powering this infrastructure. Following our successful partnership with GIC on the initial xScale data center joint venture in Europeannounced last year, we are now continuing our partnership with the formation of a new joint venture in Japan. The new facilities under this JV will allow our hyperscale customers to streamline their continued growth, while strengthening Equinix'sleadership position in the cloud ecosystem."
Equinixand GIC to Form Hyperscale Joint Venture in Asia-Pacific[blog]
- Learn more about Platform Equinix [website]
- Global Interconnection Index Volume 3 [market study]
Equinixand GIC Partner to Develop Hyperscale Data Centers in Europe[ Structure Researchreport]
This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, risks related to
 Nasdaq: "The 5 Largest Economies In The World And Their Growth In 2020" https://www.nasdaq.com/articles/the-5-largest-economies-in-the-world-and-their-growth-in-2020-2020-01-22
 RocketSpace: https://www.rocketspace.com/corporate-innovation/japans-3-hottest-cities-for-startups-and-innovation
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