Colony Capital, through Digital Colony Partners I, and specifically, portfolio company Scala Data Centers today announced that it has agreed to acquire Algar Tech’s data center and colocation operations in Campinas, which is 50 miles (80 kilometers) northwest of São Paulo, Brazil. Notably, Algar Tech is the IT outsourcing division of Brazilian telecommunications company Algar Telecom.

Algar Tech Facility – Scala to Acquire

Scala Data Centers is acquiring Algar Tech’s existing 6-megawatt retail colocation facility, which first opened in 2009. Specifically, the data center is located in Campinas which is the tenth largest municipality in Brazil, and a leading technological hub in Latin America. Scala will integrate Algar Tech’s facility into its portfolio and subsequently add significant capacity at the Campinas site.

Scala Data Centers – Campus in Campinas, Brazil

Initially, Scala Data Centers will modernize and expand Algar Tech’s current Campinas building to support near-term customer requirements. Simultaneously, Scala will begin development of a second data center on the campus with 45 megawatts of power capacity. Furthermore, at a to-be-determined date, Scala will build a third data center at the Algar Tech site with another 45 megawatts of power capacity.

In total, Scala Data Centers intends to build a campus that will comprise three buildings with 100 megawatts of power capacity and over 130k sqm of area, once fully built-out. To fund the Campinas development at the Algar site, an investment of $276m U.S. dollars (R$1.5bn) will be made by Scala, which is likely to come from a combination of equity from Digital Colony and third-party debt.

Scala Data Centers – Overview

Scala Data Centers is Colony Capital’s hyperscale data center platform for Latin America. Currently, the company is the second-largest hyperscale data center provider in Brazil, behind Ascenty of Digital Realty. During 2020, the company recorded ~16 megawatts of bookings and turned-up 18 megawatts of power capacity.

Overall, Scala has two operating hyperscale campuses, one currently under development, and more in the planning stage. Below is a break-down of Scala Data Centers’ portfolio, which if fully developed, would encompass 300+ megawatts of power capacity:

Operating and Under Development

  • SP1 (São Paulo – Tamboré) comprises 25 megawatts of power capacity, across 188k sqft (17.5k sqm) of total area
  • SP2 (São Paulo – Alameda Glete) comprises 7 megawatts of power capacity, across 70.0k sqft (6.5k sqm) of total area
  • SP3 (São Paulo – Tamboré) will comprise 12 megawatts of power capacity, across 56.0k sqft (5.2k sqm) of total area. Notably, SP3 is currently under construction, and expected to be operational in 2021

Future Pipeline – Planning Stage

  • SP4 (São Paulo) will comprise 23 megawatts of power capacity, with construction planned for 2021
  • Tamboré Expansion will comprise 117 megawatts of power capacity
  • São Paulo Countryside will comprise 128 megawatts of power capacity, over two campuses

Scala – Ambitions Beyond Algar Tech and Brazil

Colony Capital notes that data center supply, in Brazil alone, will grow to 550 megawatts of total power capacity, over the next 5 years. Indeed, this compares to the current data center supply in Latin America, which represents only ~250 megawatts of power capacity between Brazil, Mexico, Chile, and Colombia.

As a result, Colony Capital intends to grow the Scala Data Centers platform in Brazil and other Latin American markets. Indeed, Scala is seeking to enter Mexico, Chile, and Colombia, with two campuses in each country. Specifically, the company has set itself the target of having full operations in these countries by 2022 or 2023.

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