Equinix has announced a significant joint venture (JV) agreement with GIC and CPP Investments, aiming to raise over $15 billion in capital to expand its xScale hyperscale data center portfolio. This new initiative is expected to dramatically scale Equinix‘s data center capacity to support hyperscale companies, such as major cloud service providers, and to meet the growing demand driven by advancements in artificial intelligence (AI) and cloud computing.
The deal is structured as a limited liability partnership, with Equinix holding a 25% equity stake and GIC and CPP Investments each controlling 37.5%. The agreement is subject to regulatory approvals, anticipated to be completed by the fourth quarter of 2024.
The joint venture marks Equinix’s first collaboration with CPP Investments, while GIC and Equinix have previously partnered on multiple xScale projects across Asia, Europe, and the Americas. CPP Investments, which manages assets for the Canada Pension Plan on behalf of over 22 million participants, brings a robust financial backing to the partnership. Together, the partners plan to raise capital not only through equity contributions but also by taking on debt, boosting the total investment pool to an impressive $15 billion over time.
At the core of this venture is the expansion of Equinix’s xScale hyperscale facilities. These data centers are designed to cater to the specific needs of hyperscale cloud providers, including the biggest players in AI and cloud computing, who require vast amounts of computing power and storage. The goal is to develop cutting-edge xScale facilities across multiple U.S. campuses, adding over 1.5 gigawatts of additional capacity to accommodate the exponential growth in demand from hyperscale clients.
Cloud Computing and AI
Hyperscale data centers are vital for companies that manage massive amounts of data and workloads, particularly in industries like cloud computing and AI. These centers provide scalable infrastructure that allows for core workload deployments, while also enabling companies to expand their access point footprints in Equinix’s International Business Exchange (IBX) data centers. Equinix’s platform spans 72 global metro areas, offering direct connectivity to an ecosystem of over 10,000 organizations. This ecosystem, coupled with the ability to operate in close proximity to major global cloud operators, offers hyperscalers significant operational advantages.
The joint venture would play a crucial role in expanding Equinix’s hyperscale portfolio, which is already substantial. Currently, Equinix’s portfolio of hyperscale joint ventures across Europe, Asia-Pacific, and the Americas includes more than 35 facilities, generating over 725 megawatts (MW) of power capacity. With a committed investment exceeding $8 billion, this portfolio serves some of the world’s largest cloud service providers, ensuring they have the necessary infrastructure to manage their core workload deployment needs.
Boosting Capacity and Sustainability
The expansion of xScale facilities through this new joint venture will strengthen Equinix’s position as a leader in hyperscale infrastructure, offering more private on-ramps to leading global cloud service providers than any other platform. This expansion is not only about capacity; it also aims to enhance the sustainability of Equinix’s infrastructure. All xScale data centers will be certified by Leadership in Energy and Environmental Design (LEED), or an equivalent regional accreditation, reflecting Equinix’s commitment to energy efficiency and sustainable digital infrastructure.
Equinix’s hyperscale data centers serve as critical infrastructure for hyperscalers, many of whom are key players in the AI ecosystem. By offering direct connectivity and the ability to scale operations within a single platform, Equinix enables these companies to meet the growing demand for AI-driven services while maintaining operational efficiency. As AI and cloud technologies continue to evolve, the demand for such high-capacity, high-performance data centers will only increase.
The partnership between Equinix, GIC, and CPP Investments is set to further enhance Equinix’s ability to deliver on this demand. With regulatory clearances expected in late 2024, the joint venture is poised to make a significant impact on the data center landscape, offering hyperscalers the infrastructure they need to expand and innovate.
Morgan Stanley & Co. LLC acted as the exclusive financial advisor to Equinix throughout the transaction, helping to secure this transformative deal that will not only expand Equinix’s xScale capacity but also solidify its role as a critical player in the future of hyperscale cloud infrastructure.
