Asia-Pacific-focused ESR Group has raised over US$1 billion in equity commitments for the first close of its inaugural vehicle, Data Centre Fund 1 (ESR DC Fund 1), dedicated to the development of its growing data centre business.
ESR DC Fund 1, the company says, 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 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 company’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 a 300-megawatt (MW) IT load. Among these projects is a key asset the company acquired in Osaka that will be developed into a multi-phase data centre campus with a 95MW IT load development potential to serve both hyper-scalers and co-location operators in the rapidly growing Osaka market.
The rapid surge in data consumption, fuelled by continued growth in cloud computing and social media use, continues to drive investor interest in Asia-Pacific data centres, the company notes, 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 Asia-Pacific 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.
“Asia-Pacific is the prime market for data centre development and investment in the new era of digitalization,” says Jeffrey Shen and Stuart Gibson, co-founders and co-CEOs of ESR. “As the largest new economy real estate platform in the region, we are looking to play into the critical need for digital infrastructure in a big way going forwards.”