Equinix Forms Joint Venture for Data Center Expansion

(Reuters) – Data center firm Equinix (NASDAQ:EQIX) is forming a joint venture with Singapore’s sovereign wealth fund GIC and Canada Pension Plan Investment Board to raise over $15 billion in capital, as announced on Tuesday.

The partnership aims to expand the U.S. footprint of “hyperscale” data centers, which are the largest in the industry, providing massive networking capacity and consuming power akin to that of a big city.

Importance of the Joint Venture

This announcement coincides with the race among companies in various industries to integrate artificial intelligence technologies, thereby increasing the demand for the substantial computing power and storage offered by data centers.

Hyperscalers and Major Tech Companies

Large data centers, like those Equinix aims to build, are used by hyperscalers, which include the world’s tech giants like Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOGL)’s Google.

The joint venture will nearly triple the investment in Equinix’s hyperscale center program, acquiring land for new facilities and adding over 1.5 gigawatts of new capacity over time.

Financial Breakdown

The Canada Pension Plan Investment Board (CPP Investments) and GIC will each control a 37.5% equity interest in the joint venture, while Equinix will hold 25%. The venture will also incur debt to eventually raise over $15 billion in total investable capital.

Context and Growth

Equinix has seen strong growth in recent quarters driven by the demand for its data centers, prompting the company to raise its annual core earnings forecast in August. The firm is also looking to expand in high-growth regions, having acquired three data centers in the Philippines earlier this year.

Moreover, Equinix already has a partnership with Singapore’s GIC for hyperscale projects across various regions.