Equinix strikes $769m deal to develop xScale data centers in Australia

Equinix and PGIM Real Estate are laying down AU$769 million (US$575 million) to develop two xScale data centers in Sydney, Australia.

The limited liability partnership between the two companies will bring about the launch of the SY9x and SY10x data centers, the first of which is expected to open in the first quarter of next year.  Together, the data centers will provide 55 megawatts of power to a group of hyperscale companies, including cloud service providers.

According to Equinix president and CEO Charles Meyers, the partnership with PGIM Real Estate will help hyperscalers to expand within the Equinix ecosystem in Australia.

The deal will enable PGIM Real Estate to hold an 80% equity interest in the joint venture, while Equinix holds the other 20%. The deal still needs regulatory approvals and must meet closing conditions, but it is on track for closure in Q4 this year.

PGIM Real Estate chief executive officer Eric Adler comments, "We are extremely pleased to partner with Equinix on this investment in Sydney, and we look forward to expanding this strategic relationship in other markets, thereby providing our investors further access to the increasingly important digital infrastructure sector. This is a highly symbiotic venture between two market-leading firms with complementary business models and global capabilities.

Equinix's entire xScale data center portfolio totals more than US$7.5 billion invested in 34 facilities that will deliver a combined total of 675 MW once the Sydney data centers become operational. The company's other xScale data centers in Asia Pacific is TY12x, located in Tokyo.

Equinix points to its Global Tech Trends report, which found that both hybrid and multicloud deployments have risen from 28% to 47% year on year.

Structure Research head of research, Jabez Tan, says Australia's hyperscale market could grow double the rate of the retail segment by 2026 due to 'unprecedented' levels of cloud adoption.

"Equinix's expansion into Australia's hyperscale market is a timely move to address the aggressive demand among hyperscalers in Australia and will further accelerate digital transformation in the country.

Equinix also operates a string of International Business Exchange (IBX) data centers worldwide, 17 of which are in Australia, and another to open in Perth later this year.

Equinix IBX and xScale data centers both run on Platform Equinix, which connects to a platform of more than 230 data centers to connect businesses and customers. The company states that xScale data centers enable hyperscalers to grow and leverage an ecosystem of 10,000 customers.

"The xScale program in Australia will enable enterprises to directly connect and operate in proximity to the largest global cloud operators to build and grow their hybrid multicloud infrastructure," the company concludes.

Citi served as the exclusive financial advisor to Equinix in connection with this transaction.