Equinix-GIC Data Center JV Will Go Big in Europe
REDWOOD CITY, Calif. -- Equinix, Inc. (Nasdaq: EQIX), the global interconnection and data center company, today announced the signing on June 27, 2019, of a greater than U.S.$1.0 billion initial joint venture in the form of a limited liability partnership with GIC, Singapore's sovereign wealth fund, to develop and operate xScale data centers in Europe.
The initial facilities in the joint venture will serve the unique core workload deployment needs of a targeted group of hyperscale companies, including the world's largest cloud service providers. The facilities, on or proximate to some of Equinix's existing IBX campuses, will allow these key enablers of digital transformation to streamline their continued growth, while strengthening Equinix's leadership position in the cloud ecosystem, as enterprises increasingly embrace hybrid multicloud as the IT architecture of choice.
For years, hyperscale operators, including Alibaba Cloud, Amazon Web Services, Microsoft Azure, Oracle Cloud Infrastructure and Google Cloud, have partnered with Equinix to leverage its global platform of 200 International Business Exchange™ (IBX) data centers to directly connect to their strategic business partners and customers.
Today, Platform Equinix offers the most access points—the "on- and off-ramps to the cloud"—to the top global cloud service providers. In addition to these customer access points, hyperscale companies are investing in large-scale data center deployments to accommodate their rapidly growing core workload needs. With xScale data centers, hyperscale companies will now be able to add core deployments at Equinix to their existing access point footprints, enabling their growth on a single platform that spans more than 50 global metros and offers direct interconnection—within a vibrant set of ecosystems—to their customers and strategic business partners.
Under the terms of the agreement, GIC will own an 80% equity interest in the joint venture and Equinix will own the remaining 20% equity interest. The joint venture is expected to close in Q3 2019, pending regulatory approval and other closing conditions.
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, as well as certain other development interests, to the joint venture. A significant portion of London LD10 and Paris PA8 are already leased. Under the terms of this joint venture, additional new xScale data centers are expected to be developed in Amsterdam, Frankfurt (two sites) and London. These initial six facilities, when fully built out, will provide approximately 155 megawatts (MW) of power capacity.
Upon closing of this initial joint venture, GIC is expected to have contributed cash to fund its 80% equity interest in the joint venture, and Equinix is expected to have transferred its LD10 and PA8 IBX assets and certain development investments in return for net cash proceeds and a 20% equity interest in the joint venture. At a future date, pending the delivery of certain contractual milestones related to the four development sites, Equinix will receive additional cash funded through additional equity contributions.