ESR has announced the first close of over US$1 billion in equity commitments for its inaugural vehicle, Data Centre Fund 1, dedicated to the development of its data centre business.
ESR DC Fund 1 brings 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.
ESR’s current data centre development portfolio comprises 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.
Jeffrey Shen and Stuart Gibson, Co-founders and Co-CEOs of ESR, said: “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.”
According to 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 2021.
Data consumption has grown by four times over the past five years in Asia, 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 combined, the company noted.