Global colocation and interconnection provider Equinix plans to form a joint venture with Singapore's sovereign wealth fund, GIC, to develop and operate hyperscale-focused data centers in Europe.
'xScale' data centers will target companies including Alibaba Cloud, Amazon Web Services, Microsoft Azure, Oracle Cloud Infrastructure and Google Cloud. The joint venture, which will be 80 percent owned by GIC, will have more than $1bn in financial backing.
The joint venture is expected to close in Q3 2019, pending regulatory approval and other closing conditions.
Update: For more, be sure to read our interview with Equinix's Eric Schwartz.
As part of the deal, Equinix will sell both its London LD10 (retaining part of that business under a lease back) and Paris PA8 IBX data centers and the associated leases to the joint venture. Additional xScale data centers are expected to be developed in Amsterdam, Frankfurt (two sites) and London. These six facilities, when fully built out, will provide approximately 155MW of power capacity.
GIC will provide the investment to gain its 80 percent equity interest, while Equinix will gain a 20 percent stake from its LD10 and PA8 IBX sale. Equinix will also gain some net cash proceeds from the sale, and in the future - pending the delivery of certain undisclosed contractual milestones related to the four development sites - will receive additional cash funded through additional equity contributions.
The joint venture has commitments for €850 million ($964m) of secured credit facilities, including a €200m ($227m) secured term loan facility that will be used to fund a portion Equinix's sale of LD10 and PA8 IBX; a €610m ($692m) secured delayed draw term loan facility that will be used to fund a portion of the planned development and construction costs for the data centers in Amsterdam, Frankfurt and London; and a €40m ($45m) secured revolving credit facility that will be used to fund working capital needs and 'other general corporate purposes of the joint venture.'
Equinix said that xScale data centers offer a differentiated value proposition from existing wholesale data center operators due to their access to Equinix's line of interconnection and Edge services, and because the facilities will be "engineered to meet the technical and operational requirements and price points of core hyperscale workload deployments."
The data centers will be managed and staffed by Equinix.
"It has been a long journey to reach this point, but we are tremendously excited to announce the formation of our first xScale data centers joint venture," Equinix CEO Charles Meyers said.
"Partnering with a world-class investment partner like GIC will provide the opportunity to make significant capital investments in order to capture targeted large-footprint deployments while continuing to optimize our capital structure.
"The JV structure will enable us to extend our cloud leadership while providing significant value to a critical set of hyperscale customers. We look forward to launching similar JVs in other operating regions and believe that these efforts will continue to further differentiate Equinix as the trusted center of a cloud-first world."