Digital Realty enters the Indian market through a JV with Brookfield

After Iron Mountain, Equinix, and EdgeConneX, it is the latest global data centre developer to announce intentions to expand into India, which is quickly becoming a major new data centre market.

Digital Realty enters the Indian market through a JV with Brookfield

Through a joint venture with global infrastructure investor Brookfield Infrastructure, Digital Realty is expanding into India, accelerating the development of digital infrastructure in the world's second-largest country. It is the latest global data centre developer to announce intentions to expand into India, which is quickly becoming a major new data centre market. Iron Mountain, Equinix, and EdgeConneX have all announced new collaborations in the country.

The BAM Digital Realty joint venture will be Digital Realty's second collaboration with Brookfield. The two businesses previously teamed together to buy Ascenty, a data centre infrastructure developer in Brazil. In Japan, Digital Realty has built locations in a 50/50 joint venture with Mitsubishi.

MC Digital Realty data centre in Osaka, Japan, built through a JV with Mitsubishi

A. William Stein, the CEO, Digital Realty, said. “India is a fast-growing data centre industry with a bright future ahead of it, with rising adoption of digital business models among a populace that understands the importance of technology in future economic development. With over 250 megawatts of IT load capacity built out or under development in Brazil, Chile, and Mexico, our existing collaboration with Brookfield, our Ascenty platform across Latin America, has already generated long-term value to our customers.”

India, which has a population of 1.4 billion people, is likely to see rapid data centre expansion in the next years. According to JLL research, India's colocation and data centre industry would increase from 375MW in early 2020 to 1.08 gigawatts by 2025, representing a 21% annual growth rate. India is the second-fastest-growing digital economy, according to McKinsey, and its IT and communications sectors are expected to double in size by 2025.

A Strategic Market for the growth of Data Center

With 290 facilities in 24 countries, Digital Realty is one of the major participants in the global data centre market and has been looking for a way into India. After considering a number of options, Digital thinks it has found the perfect partner in Brookfield Infrastructure, one of the world's leading owners of energy, transportation, and digital infrastructure.

The joint venture's investment objective was not specified by the two firms. “Given the market size and projected growth prospects in India, we expect the investment amounts to be considerable over time,” said Greg Wright, Chief Investment Officer for Digital Realty.

With over $20 billion in assets under management, including infrastructure, renewable energy, and real estate, Brookfield has been investing in India for over a decade. In India, the company has a portfolio of 139,000 active telecom wireless towers.

Through this joint venture, we are thrilled to extend both our collaboration with Digital Realty and our footprint in India,” said Arpit Agrawal, Managing Director and Head of India and the Middle East for Brookfield Infrastructure. “We think BAM Digital Realty is well-positioned to play a major role in meeting the enormous and rising data demand in the nation and to offer a distinctive solution to clients by developing a high-quality, multi-city, India-focused data centre platform.

Joint ventures with investors are becoming an increasingly essential instrument for data centre firms to fund expansion, as well as a way for investors like Brookfield and sovereign wealth funds like Singapore's GIC to acquire a presence in the industry as it develops as a significant new asset class.

Developers may conserve cash on their balance sheet while profiting on hyper-scale development, including closer ties with the cloud builders who are determining the future of the technological environment, by collaborating with major investors.

Increasing Opportunity and Competition

BAM Digital Realty plans to purchase land tracts in several Indian metros in order to build data centre complexes to accommodate hyper-scale operators, as well as global and local businesses. The joint venture plans to develop, construct, and operate long-term data centres. The joint venture is anticipated to be completed in the second half of 2021.

India is on the verge of fast service digitalization to support the country's economic growth,” said Mark Smith, Digital Realty's Managing Director for APAC. “PlatformDIGITAL will provide clients with a consistent deployment methodology for expanding their operations into India, as well as fit-for-purpose infrastructure that will enable them to develop their digital business into one of the fastest-growing markets in the world.”

Source: Data Center Frontier