Mitsui & Co, one of Japan’s largest investment companies, through its subsidiary Mitsui & Co Asset Management Holdings (MAH), and the Canada Pension Plan Investment Board (CPP Investments) today announced the establishment of a joint venture known as the Japanese Data Centre Development Fund (Mitsui Fund) to initially develop hyperscale data centers, in-partnership with Fidelity Investments and Colt Data Centre Services (DCS), comprising 90 megawatts of power capacity in greater Tokyo and Osaka, Japan. Notably, CPP Investments will allocate ~$320m USD (~$400m Canadian dollars) in equity into the Mitsui Fund joint venture in Japan.
As an initial data center development project, the Mitsui Fund (Mitsui and CPP Investments) will launch a 50%/50% joint venture to develop and operate data centers with Fidelity Investments. Specifically, Fidelity Investments’ portfolio company, Colt Data Centre Services (DCS), will design, develop, and operate the facilities for this venture.
At the same time, Mitsui & Co, Realty Management Ltd, the real estate fund management subsidiary of Mitsui & Co Asset Management Holdings (MAH), will serve as the asset manager for the joint venture. Mitsui & Co, Realty Management’s responsibilities include structuring, financing, land sourcing, and development support.
Data Center Developments in Japan – Mitsui, CPP, Fidelity, Colt
Mitsui Fund and Fidelity Investments’ joint venture will initially develop two hyperscale data centers with 90 megawatts of power capacity in greater Tokyo (Chiba Prefecture) and Osaka (Kyoto Prefecture), Japan. Specifically, Colt Data Centre Services (DCS), will design, develop, and operate the data centers in Tokyo and Osaka.
Additionally, there exists the potential for further growth of the partnership in Japan and the broader Asia-Pacific region.
Colt Data Centre Services (DCS) – Presence in Japan
Beyond the Mitsui partnership, Fidelity’s Colt Data Centre Services (DCS) has 50 megawatts of existing power capacity built in Japan. Indeed, the company’s presence will grow to 140 megawatts of power capacity in Japan, as part of this joint venture.
To-date, Colt Data Centre Services (DCS) has had success in its Japan data center business. Specifically, the company pre-leased 94% of its capacity before the launch of its 27-megawatt Tokyo Inzai Three facility in November 2020.
Colt Data Centre Services (DCS) operates 26 carrier-neutral data centers across 18 cities globally. Through its partnership with Mitsui, the company will further penetrate Japan’s domestic enterprise sector and accelerate its land banking strategy.
Japan – Data Center Market
Demand for data center capacity in Japan is significantly greater than the country’s existing supply. Indeed, this is shown through recent announcements from Princeton Digital (Warburg Pincus and OTPP), Digital Edge (Stonepeak Infrastructure), ESR Cayman (Warburg Pincus), and AgileDC (DigitalBridge).
At the same time, the supply of data center capacity in Japan is restricted by a number of factors, including:
- Difficulty of securing large-scale electricity generation capacity from power sources
- Lack of developable sites with high-resilience to natural disasters, in close proximity to the Tokyo and Osaka city centers
- Significant capital requirements for developing hyperscale data centers