DigitalBridge Group today announced that the International Finance Corporation (IFC), a member of the World Bank Group, will be investing $100m of equity into emerging markets portfolio companies of its Digital Colony Partners (DCP) private equity funds, of which $75m has been committed to Scala Data Centers, EdgePoint Infrastructure, and Highline do Brasil.
IFC Co-Investments – DigitalBridge Portfolio Companies
International Finance Corporation’s (IFC’s) initial $75m of equity capital will be invested in the expansion of towers and data centers at the following DigitalBridge portfolio companies:
Scala Data Centers
Scala Data Centers is a hyperscale data center developer which currently operates four facilities in Brazil with 50+ megawatts of total power capacity. Further, the company has a near-term roadmap to reach 80+ megawatts of IT critical capacity across Latin America, including in Chile and Mexico.
Scala’s key shareholder is DigitalBridge’s Digital Colony Partners (DCP) I private equity fund.
EdgePoint Infrastructure owns a portfolio of 10k+ tower and distributed antenna system (DAS) sites across Indonesia and Malaysia. Further, the company aims to manage 20k+ sites in the Southeast Asia region (e.g., expanding into countries including the Philippines). EdgePoint has assembled its portfolio through acquisitions and build-to-suit (BTS) agreements comprising:
- Indosat Ooredoo: 4.2k towers in Indonesia through a sale-and-leaseback transaction. Additionally, EdgePoint has a build-to-suit (BTS) agreement to construct 1.25k greenfield sites for Indosat
- Centratama: 4.7k towers and DAS sites in Indonesia, with a potential 100% ownership interest
- Asiaspace: 178 towers in Malaysia by purchasing the company’s towers
EdgePoint is owned by DigitalBridge’s DCP II fund, alongside Abu Dhabi Investment Authority (ADIA), a sovereign wealth fund.
Highline do Brasil
Highline do Brasil is an independent tower company, small cell, and DAS operator with a presence in Brazil’s main cities, across 27 states. Presently, the company operates ~4.0k macro and rooftop sites, 600 small cell nodes, and 300 indoor DAS systems in Brazil. As of July 2021, Highline do Brasil was constructing 400+ towers throughout Brazil.
Highline is owned by DigitalBridge’s DCP I fund, alongside Alberta Investment Management Corporation (AIMCo), a Canadian pension fund.
Future IFC Equity Commitment to DigitalBridge
In the future, the IFC will invest the remaining $25m of equity in other digital infrastructure assets in emerging markets managed by DigitalBridge. Particularly, the IFC will invest this $25m of equity either through a:
- Blind pool investment vehicle investing alongside one of Digital Colony’s existing investment funds (i.e., sidecar investment); or
- Incremental managed co-investment located in emerging markets, similar to Scala, EdgePoint, and Highline
DigitalBridge currently expects that IFC’s future emerging markets sidecar investment will reside in Latin America or East Asia.
IFC’s Environmental and Social Mitigation Measures – DigitalBridge
Over the past 10 years, the IFC has invested and mobilized $5.9bn into digital infrastructure. Moreover, the organization has invested and mobilized $1bn+ between July 2020 and June 2021. However, the IFC’s mandate extends beyond only investment, and into measures that result in environmental and social improvements to society.
The International Finance Corporation (IFC) will support DigitalBridge, Scala, EdgePoint, and Highline in aligning their environmental and social practices with IFC’s performance standards. Specifically, the IFC’s investment alongside DigitalBridge will be managed to follow the four performance standards (PS) below:
- Assessment and Management of Environmental and Social Risks and Impacts (PS 1)
- Labor and Working Conditions (PS 2)
- Resource Efficiency and Pollution Prevention (PS 3)
- Community Health, Safety and Security (PS 4)
Below are select excerpts from each of IFC’s four performance standards which provide examples of the considerations and key metrics that DigitalBridge and its portfolio companies will focus on.
Assessment and Management of Environmental and Social Risks & Impacts (PS 1)
IFC’s equity capital will be used, in large part, to develop greenfield facilities at locations or on land that has not yet been identified. As a result, Scala, EdgePoint, and Highline will bring these locations or land into compliance with the requirements of the IFC’s performance standards.
Presently, Highline and Scala acquire or lease land for the development of towers and data centers. Through this process, both companies assess legal and biodiversity considerations to ensure compliance with relevant requirements in Brazil.
EdgePoint develops towers by following regulations which establish setback distances to houses and roads, as well as when land is designated as protected and forested areas. In Malaysia, EdgePoint seeks to repurpose lamp posts or other structures as part of its tower construction.
Labor and Working Conditions (PS 2)
As of Q2 2021, DigitalBridge, Scala, EdgePoint, and Highline provide the following breakdown of their labor force:
- DigitalBridge: 110 direct employees in worldwide operation, of which 65% are men and 35% are women
- Scala Data Centers: 262 employees, including statutory directors and interns, of which 78% are men and 22% are women
- EdgePoint Infrastructure: 430 employees, in both Indonesia and Malaysia, of which 65% are men and 35% are women
- Highline do Brasil: 84 employees, comprised of 80 direct hires and 4 contractors, of which 50% are men and 50% are women
Resource Efficiency and Pollution Prevention (PS 3)
Below are implementations of resource efficiency procedures at Scala and Highline to optimize their use of energy and water:
- Scala Data Centers: relies 100% on renewable energy to satisfy all of its energy needs. Additionally, the company has systems in-place to track and reduce water consumption, with specific KPIs at all its data centers
- Highline do Brasil: commitment to zero greenhouse gas emissions by 2030. To this end, the company is installing photovoltaic solar panels to provide the minimum energy requirements for its tower users
Overall, Scala, EdgePoint, and Highline anticipate operating below the 25k tons per year threshold, established by the IFC, for greenhouse gas emissions.
In terms of pollution, Scala, EdgePoint, and Highline all do not generate air emissions through their data center and tower operations. However, Scala utilizes diesel backup generators and produces domestic wastewater, which it discharges into municipal sewage systems. In contrast, EdgePoint and Highline do not generate wastewater during their operations.
Community Health, Safety and Security (PS 4)
EdgePoint and Highline ensure that towers have fences and locks, in order to protect communities from entering the tower area. Specifically, the companies have set the following community safety goals:
- EdgePoint Infrastructure: Indonesia and Malaysia towers fenced and locked by the end of 2022
- Highline do Brasil: all towers fenced and locked by the end of 2023
Scala Data Centers hires non-armed security services with specialized companies for its data center sites. Additionally, in Indonesia, EdgePoint appoints security personnel for its office safety.
In contrast, Highline do Brasil does not hire security personnel for its administrative offices or any of its tower sites. However, the company ensures security and safety features through security cameras and alarm equipment.