Datacentrepricing (DCP), the specialists in worldwide Data Centre research, today publishes a new report – Private Equity & Sovereign Wealth Investors & Data Centre Investment. The report reveals the massive investments being made in Data Centres by Private Equity investors worldwide, with some markets – including Brazil, Indonesia, India, Ireland, Japan, Poland and Portugal – being transformed by the large Hyperscale Data Centre investments being made by PE investors.
DCP’s latest research reveals that that Private Equity (PE) & Sovereign Wealth Investors (SWI) provide new impetus to hyperscale Data Centre investments and have become key players in the introduction of new facilities and also the acquisition of existing Data Centres.
Additionally, established Data Centre Providers (including Digital Realty & Equinix) are using partnerships with PE & SWI funds to fund entry into new markets (as in South America & Brazil) or provide investment in dedicated Hyperscale Data Centres (as xScale Data Centres).
The DCP Private Equity & Sovereign Wealth Investors & Data Centre Investment report concludes that:
i) Private Equity providers investing in Data Centres are now doing so on a large scale. The scale of the Data Centre investments can be huge – running into billions of USD for a large campus-based facility -such as the Start Up campus (Sines 4.0) in Portugal at USD $3.97 billion when complete.
2) The number of new Private Equity investors is increasing. Real estate companies such as Lendlease are creating joint ventures with a SWF (Sovereign Wealth Fund) or more often via a private equity partner to spread the cost and risk of large Hyperscale Data Centres investment in new markets.
3) Private Equity investors now account for a large share of new Data Centre developments. In a number of Country Markets DCP finds that Private Equity investors account for the majority of new Data Centre developments – for example boosting Data Centre power capacity by 6 times in Portugal, 1.9 times in Ireland, almost 1.5 times in Brazil, almost 1.2 times in Indonesia and over 0.8 times in Poland.
4) Private Equity funds are investing in speculative Data Centre developments in new markets: It is significant that Private Equity funds are willing to invest in large-scale Hyperscale facilities in relatively new markets (including India, Indonesia & Japan) with new power per facility of 50 MW to 100 MW or more – whilst established Data Centre Providers typically invest in their existing Metros as a lower risk strategy.
5) Most new Data Centres that are being built in new Metro markets are being built by private equity investors: Private equity funds are focusing on markets where there is a shortage of high-quality Hyperscale Data Centre capacity (including Japan, Poland, Brazil, Indonesia & Portugal) with new space being built outside the main capital city area, taking advantage of lower land costs – in effect private equity funds can take more risk on a longer time-frame than the established Data Centre Provider.
6) The Data Centre industry is set for further forecast growth as more private equity investors enter the space: ” DCP forecasts that the amount of private equity Data Centre investment is forecast to increase from US$8 billion up to US$13.3 billion ” from the end of 2021 to the end of 2025 – an overall growth of 66% over the four-year period. Private Equity funds have identified the Data Centre segment as able to generate above average growth from cloud & content users coupled with stable tenants (with low churn levels) and are attracted to those markets with low Hyperscale Data Centre penetration.