Iron Mountain today announced an agreement to form a joint venture with Web Werks, one of India’s top colocation data center providers. Iron Mountain expects to invest $150m over the next two years and will be the majority investor in the joint venture after the investment period. The first phase of the transaction, Iron Mountain’s minority investment into Web Werks, is expected to close within the next 90 days.
Web Werks – Overview
Web Werks operates 3 data centers, representing 4 megawatts of power capacity. Collectively, these data centers comprise 225k sqft in India, supporting over 850 customers. Specifically, Web Werks operates three Tier III, carrier-neutral data centers, in Mumbai, Pune, and Delhi.
Within its data centers, Web Werks provides access to a neutral interconnection ecosystem of carrier, content, and cloud service providers. Specifically, participants include over 160 Internet Service Providers (ISPs) and 6 internet exchanges. Indeed, Web Werks’ Mumbai DC2 facility is one of the top 30 most interconnected data centers worldwide.
Web Werks supports a broad base of customers who require the ability to efficiently scale their businesses. Indeed, notable customers of Web Werks include:
- Network Providers: Tata Communications, Reliance Communications, and IPTP Networks
- Wireless Carriers: Reliance Jio, Bharti Airtel, and Vodafone Idea
- Service Providers: Akamai Technologies, DE-CIX, and Sify Technologies
Iron Mountain – Overview and Strategy
Iron Mountain operates 15 data centers, representing 130 megawatts of power capacity. Collectively, these data centers comprise 3.1 million sqft, in the United States, Europe, and Asia, supporting over 1,300 customers. Specifically, Iron Mountain operates in key global data center markets including Northern Virginia, Phoenix, New Jersey, London, Amsterdam, and Singapore.
Business Plan – Iron Mountain and Web Werks Joint Venture
Iron Mountain’s investment in Web Werks will allow the company to immediately add capacity in its three existing markets of Mumbai, Pune, and Delhi. Subsequently, Iron Mountain will fund Web Werks’ growth and expansion in India, into the markets of Bangalore, Hyderabad, and Chennai.
Once the expansion is complete, the joint venture will be one of only a few data center operators with assets across all major cities in India. Furthermore, the joint venture will own and operate both hyperscale and interconnection data center facilities.
Rationale – Iron Mountain and Web Werks Joint Venture
Iron Mountain is investing in this joint venture to support its existing hyperscale, network, content, and enterprise customers. Indeed, Iron Mountain’s customers are seeking ways to expand and scale their presence in the rapidly growing India market.
Upon closing, Iron Mountain’s customers will gain access to Mumbai, Pune, and Delhi, being three swiftly growing markets in India. Notably, Web Werks’ Mumbai DC2 data center is the second most active peering facility in India, only behind GPX’s Mumbai 1 facility, which Equinix is in the process of acquiring.
Overall, India provides an important next step in expanding Iron Mountain’s Asia-Pacific footprint. To this point, the company is experiencing strong regional demand from its global customers. This demand has increased following the opening of Iron Mountain’s 2.6-megawatt Singapore data center, SIN-1, in 2019.
Transaction Structure
The joint venture with Web Werks is structured such that Iron Mountain enters the company as a minority investor. Specifically, Iron Mountain is initially buying into the Web Werks platform that owns the 3 existing data centers. Indeed, Web Werks owns brownfield expansion capacity next to its existing data centers, as well as land for further greenfield expansion opportunities in new markets.
Overall, Iron Mountain is paying a premium multiple for its initial ownership interest in Web Werks. Subsequently, Iron Mountain will invest $150m into the company, over the next two years, on a cost-basis, as new brownfield and greenfield facilities are built-out. In turn, these follow-on investments will ultimately result in Iron Mountain holding a majority interest in Web Werks, once the developments are complete.
India Data Center Market
The Asia-Pacific region will account for half of the global colocation market by 2025, driven by emerging markets like India. Indeed, India’s data center market is projected to grow rapidly in the coming years. This is a direct result of the market having high demand and low supply of data center infrastructure.
India’s colocation data center market size is expected to grow from 375 megawatts in the first-half of 2020, to 1,078 megawatts by 2025, representing a compound annual growth rate (CAGR) of 26%. Specifically, Mumbai and Pune are key markets of opportunity in India. Indeed, these two markets combined will represent 470 megawatts of power capacity growth (67% of India’s total growth) from 2020 to 2025.
