Digital Realty is expanding into India through a joint venture with global infrastructure investor Brookfield Infrastructure, a move that will further accelerate the development of digital infrastructure in the world’s second-largest country.

Digital Realty is the latest global data center developer to announce plans to expand into India, which is emerging as an important new frontier for data center development. Iron Mountain, Equinix and EdgeConneX have also announced partnerships or acquisitions to develop capacity in India.

The joint venture, known as BAM Digital Realty, will be Digital Realty’s second partnership with Brookfield. The two companies previously partnered to acquire Ascenty to develop data center infrastructure in Brazil. Digital Realty has also used a 50/50 JV structure with Mitsubishi to build sites in Japan.

“India is a rapidly emerging data center market and offers a bright future, with accelerating adoption of digital business models among a population that recognizes the role of technology for future economic development,” said Digital Realty Chief Executive Officer A. William Stein. “Our existing partnership with Brookfield, our Ascenty platform across Latin America, has already delivered long-term value to our customers, with over 250 megawatts of IT load capacity in Brazil, Chile and Mexico either fully built out or currently under construction.”

With a population of 1.4 billion, India is expected to experience robust data center growth in coming years. A JLL report projects that India’s colocation and data center market will to grow from 375MW in early 2020 to 1.08 gigawatts by 2025, an annual growth rate of 21 percent. McKinsey has identified India as the second fastest-growing digital economy and projected that its IT and communications sector will double in size by 2025.

A Strategic Market for Data Center Growth

Digital Realty is one of the largest players in the global data center scene, with 290 facilities across 24 countries, and has been seeking an entry point in India. After exploring several opportunities, Digital believes it has found the right partner in Brookfield Infrastructure, one of the largest owners of global infrastructure for energy, transportation and digital networks.

The two companies did not stipulate an investment goal for the joint venture. But Greg Wright, Chief Investment Officer for Digital Realty, said that “given the market size and expected growth opportunities in India we expect the investment amounts to be significant over time.”

Brookfield has over a decade of experience investing in India, with approximately $20 billion of assets under management including infrastructure, renewable power and real estate. That includes a portfolio of 139,000 operational telecom wireless towers in India.

“We are pleased to further expand both our partnership with Digital Realty and our presence in India through this joint venture,” said Arpit Agrawal, Managing Director and Head of India & Middle East, Brookfield Infrastructure. “Through the development of a high-quality, multi-city, India-focused data center platform, we believe BAM Digital Realty is well positioned to play a meaningful role in addressing the large and growing data demand in the country and to offer a differentiated solution to customers.”

Joint ventures with investors are becoming an important tool for data center companies to fund growth, and provide a vehicle for investors like Brookfield and sovereign wealth funds like Singapore’s GIC to gain a foothold in the data center industry as it emerges as an important new asset class.

By partnering with large investors, developers can preserve cash on their own balance sheet while capitalizing on hyperscale growth – including deeper relationships with the cloud builders that are defining the future of the technology landscape.

Growing Opportunity, and More Competition

BAM Digital Realty intends to acquire land parcels in “multiple Indian metros” to develop data center campuses to support the needs of hyperscale operators as well as well as global and local enterprises. The joint venture expects to design, build and operate sustainable data facilities. The closing of the joint venture is expected to occur in the second half of 2021.

“India is on the cusp of rapid digitization of services to support the country’s economic growth,” said Mark Smith, Managing Director, APAC for Digital Realty. “PlatformDIGITAL will offer our new and existing customers a consistent deployment model for extending their operations into India, providing fit-for-purpose infrastructure that will enable them to scale their digital business into one of the fastest-growing data markets in the world.”

Bullet point international players

  • In August 2020 Equinix acquired the India operations of GPX Global Systems for $161 million, providing two data centers in Mumbai.
  • In February 2021. Iron Mountain Data Centers used a joint venture to enter the India market by teaming with Web Werks, one of India’s top colocation data center providers. Iron Mountain expects to invest $150 million over the next two years, after which it expects to become the majority investor in the venture.
  • Also in February, EdgeConneX announced a 50-50 joint venture with Adani Enterprises to develop and operate 1 gigawatt of data center capacity throughout India over the next decade. The AdaniConneX initiative will include both hyperscale data centers and a portfolio of Edge data centers, largely powered by renewable energy.

In addition to the global entrants, the Indian data center market also features incumbent players like NTT Global Data Centers (NetMagic), Sify, Tata and CtrlS.

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