ESR today announced the first close of over US$1 billion in equity commitments for its inaugural vehicle, Data Centre Fund 1 (“ESR DC Fund 1” [or the “Fund”]), dedicated to the development of its growing data centre business.
The ESR DC Fund 1 will bring together some of the world’s largest institutional investors, including sovereign wealth and pension funds. ESR will raise a separate discretionary capital sleeve to co-invest into the fund which will likely close the balance of the fund at the hard cap of US$1.5 billion.
Additionally, the partners have an upsize option of an additional equity commitment of US$1.5 billion, that would bring the total investment capacity to as much as US$7.5 billion over time.
The current current data centre development portfolio of the company comprises of data centre projects primely located in major data centre clusters across Asia, including Hong Kong, Osaka, Tokyo, Seoul, Sydney, Mumbai and Singapore, delivering 300 megawatts (“MW”) IT load. Amongst these projects is a key asset the Group acquired in Osaka that will be developed into a multi-phase data centre campus with a development potential of up to 95 MW IT load to serve both hyperscalers and co-location operators in the rapidly growing Osaka market. 2
“APAC is the prime market for data centre development and investment in the new era of digitalisation. The substantial first close of our inaugural data centre fund marks a significant milestone for ESR as we continue to grow and scale our digital infrastructure business. We thank our capital partners for their strong support to this exciting effort. As the largest New Economy real estate platform in APAC, we are looking to play into the critical need for digital infrastructure in a big way going forward by leveraging our core competitive advantages – our deep land sourcing capabilities, best-in-class design and construction capabilities, an integrated fund management platform as well as commitment to sustainability – with a singular focus to support our capital partners and customers to thrive and capitalise on the continued rise of the New Economy and digital transformation in APAC.”Jeffrey Shen and Stuart Gibson, Co-founders and Co-CEOs of ESR
The rapid surge in data consumption, fuelled by continued growth in cloud computing and social media use, continues to drive investor interest in APAC data centres, with investment in the sector soaring to record levels in 20211. Data consumption has grown by four times over the past five years in Asia2, while direct investment in the APAC data centre sector totalled US$4.8 billion in 2021—more than double the previous high of US$2.2 billion in 2020 and surpassing investment volumes for the past four years combined3.
“With nearly $60 billion of New Economy AUM, digital infrastructure is a key strategic focus for ESR Group. Naturally, our ambition is to offset high energy consumption by aligning with our ESG strategy to refurbish, re-develop, convert some of our existing 39.8 million sqm GFA of assets into large and edge data centres, and to explore sustainable options through actual renewable energy generation from the rooftops.”Diarmid Massey, ESR Data Centres CEO
“The APAC Data Centre fund is uniquely placed to take advantage of ESR Group’s adjacencies in land, power, fibre origination, strong pipeline of recently acquired data centre specific sites, a dedicated team of experienced Data Centres’ professionals, and partnerships with best-in-class data centre operators for co-location assets. Our ability to offer powered shells, fully fitted, and co-location assets to serve hyperscalers, enterprises as well as operators, provides a scalable solution with shorter ready-for-service timelines to our customers; and risk-adjusted strategies to our capital partners.”Devashish Gupta, ESR Data Centres CIO
The completion of the transaction is subject to relevant regulatory approvals.