Equinix has signed a USD 1 billion initial joint venture in the form of a limited liability partnership with Singapore's sovereign wealth fund GIC to develop and operate xScale data centres in Japan. The three initial facilities in the joint venture – one in Osaka and two in Tokyo -- will serve the core workload deployment needs of a targeted group of hyperscale companies. Under the terms of the agreement, GIC will own an 80 percent stake in the joint venture and Equinix will own the remaining 20 percent equity interest. The joint venture is expected to close in the second half of 2020, pending regulatory approval and other closing conditions.
Following the closure of this joint venture, GIC is expected to have contributed cash to fund its 80 percent equity interest in the joint venture. Equinix is expected to have transferred its Tokyo TY12 and Osaka OS2 development assets, along with development rights and the land for an additional data center in Tokyo, to the joint venture in return for a 20 percent equity interest in the joint venture and net cash proceeds in excess of USD 100 million. Financing for the joint venture is also expected to close in the second half of this year, and is anticipated to consist of a delayed draw term loan facility and a revolving credit facility. Proceeds from the delayed draw term loan facility are expected to fund a portion of the consideration paid to Equinix for the sale to the joint venture of TY12 and OS2 development assets, as well as to fund a portion of the planned development and construction costs for those assets. The revolving credit facility is expected to be available for working capital needs and other general corporate purposes of the joint venture.
The initial three facilities included in the joint venture will provide around 138 MW of power capacity to the Osaka and Tokyo markets when fully built-out. xScale data centers offer access to Equinix's suite of interconnection and edge services. xScale data centers are designed to meet the technical and operational requirements and price points of core hyperscale workload deployments.
In 2019, Equinix and GIC established a joint venture to develop and operate xScale data centers in Europe.
