Equinix and GIC to Form Greater than US$1.0 Billion Joint Venture to Develop and Operate Hyperscale Data Centers in Japan
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
Highlights/Key Facts:
- The initial three facilities included in the joint venture will provide approximately 138 megawatts (MW) of power capacity to the
Osaka andTokyo markets 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's comprehensive suite of interconnection and edge services. These services will tie into the hyperscale companies' existing access points atEquinix , 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.
- Platform
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 atEquinix , the ecosystem of nearly 10,000 enterprises and other companies currently operating atEquinix benefit from increased opportunities to directly connect and operate in proximity to the largest global cloud operators. Japan is the third-largest economy in the world[1] and a significant hub for regional interconnection. As one of the world's largest metro areas and a fulcrum of the Japanese economy,Tokyo is 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.Osaka is centrally located, contains the second-highest concentration of businesses inJapan , and is a center for start-up companies and innovation.[2] Both metros currently have constrained supply, yet are priorities for hyperscale growth, according to Structure Research[3].Equinix is a top data center provider inJapan with 13 International Business Exchange™ (IBX®) data centers and more than 500 employees.- In 2019,
Equinix and GIC announced the formation of a joint venture to develop and operate xScale data centers inEurope . - 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 inAsia-Pacific is forecast to reach 3,825+ Tbps by 2022, which is 28% larger thanEurope . The Cloud & IT Services segment inAsia-Pacific is forecast to grow at a 50% CAGR, outpacing all other regions globally, reaching a total bandwidth that is 49% larger thanNorth America and 119% larger than EMEA by 2022.
Financial Details:
- Under the terms of the agreement, GIC will own an 80% equity interest in the joint venture and
Equinix will 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.
Equinix is expected to have transferred itsTokyo TY12 andOsaka OS2 development assets, along with development rights and the land for an additional data center inTokyo , to the joint venture in return for a 20% equity interest in the joint venture and net cash proceeds in excess ofUS$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
Equinix for 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
Equinix in connection with this transaction.
Quotes:
Jabez Tan , Head of Research,Structure Research :
"Japan is a strategic country for regional hyperscale expansion, and the demand for data center capacity in theTokyo andOsaka markets has outstripped supply. Through this new joint venture,Equinix and 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 – leveragingEquinix for 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, andEquinix is 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 inEurope announced last year, we are now continuing our partnership with the formation of a new joint venture inJapan . The new facilities under this JV will allow our hyperscale customers to streamline their continued growth, while strengtheningEquinix's leadership position in the cloud ecosystem."
Additional Resources
Equinix and GIC to Form Hyperscale Joint Venture inAsia-Pacific [blog]- Learn more about Platform Equinix [website]
- Global Interconnection Index Volume 3 [market study]
Equinix and GIC Partner to Develop Hyperscale Data Centers inEurope [Structure Research report]
About
Forward-Looking Statements
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
[1] 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
[2] RocketSpace: https://www.rocketspace.com/corporate-innovation/japans-3-hottest-cities-for-startups-and-innovation
[3]
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SOURCE
Equinix Media Contact (Global), David Fonkalsrud, Equinix, +1 650-598-6240, dfonkalsrud@equinix.com, Equinix Media Contact (Asia-Pacific), Annie Ho, Equinix, +852 2970-7761, annho@ap.equinix.com, Equinix Investor Relations, Katrina Rymill, +1 650-598-6583, krymill@equinix.com, Chip Newcom, +1 650-598-6262, cnewcom@equinix.com