Digital Edge, an Asia-focused data center platform, backed by Stonepeak Infrastructure, today announced an agreement to acquire Sejong Telecom’s two data center assets in South Korea through an all-cash transaction. Specifically, Digital Edge is acquiring one data center in Seoul (Gangnam) and a cable landing station in Busan (Centum City). Indeed, this deal marks Digital Edge’s entry into the South Korea market and is its second market in Asia to-date.
Transaction Overview – Digital Edge and Sejong Telecom
Digital Edge’s transaction with Sejong Telecom will immediately enable the company to offer interconnection and data center services in the fast-growing South Korea market. Moreover, the facilities establish a foundation for future expansion in the two key metros of Seoul and Busan.
Sejong Telecom’s data centers have significant connectivity options from existing customers. Indeed, the company’s Seoul facility offers three major cloud interconnect nodes for AWS Direct Connect, Microsoft Azure ExpressRoute, and Google Cloud Platform’s Cloud Interconnect. Additionally, Sejong Telecom’s cable landing station in Busan is a landing point for the EAC-C2C subsea cable, which interconnects several countries across the Asia-Pacific region.
Digital Edge plans to invest additional capital to expand the capacity and improve the energy efficiency of both Sejong facilities. In aggregate, Stonepeak will invest, through the transaction consideration and subsequent expansion capital expenditures, over $120m into Digital Edge’s growth in South Korea. Finally, the transaction is expected to close in Q2 2021.
Digital Edge – Stonepeak Infrastructure’s Asia Data Center Platform
Digital Edge is supported by a $1.0bn equity capital commitment from Stonepeak Infrastructure, which is backing the company’s strategy to build a data center platform in Asia. The company is led by its Chief Executive Officer, Samuel Lee, who previously served as President of Equinix’s Asia-Pacific business from 2005 to 2019.
Given this background, Digital Edge’s approach to-date has been focused on retail colocation and interconnection-rich data centers, such as the Sejong facilities in South Korea.
Seed Investments – Digital Edge Enters Japan
Digital Edge is headquartered in Singapore and prior to today’s announcement, made a seed investment in two data centers in Japan. Firstly, Digital Edge entered into a partnership with Keihanshin Building and Kanden Energy Solution for the development of a 12 megawatt facility in Osaka, Japan. Secondly, the company formed a strategic partnership with ITOCHU Techno-Solutions, beginning with their Mejirozaka Data Center in Tokyo, Japan.
Overall, through these two data centers, Digital Edge will offer services in two of Japan’s largest data center markets. Indeed, through these markets the company will be able to serve both domestic and international customers.
Stonepeak Infrastructure Partners – Overview
Stonepeak Infrastructure Partners is an infrastructure-focused private equity firm with an opportunistic approach to investing. Founded in 2011 and headquartered in New York, Stonepeak manages $31bn of capital for its investors. Stonepeak owns companies in all four verticals of digital infrastructure, including include towers, data centers, fiber, and small cells.
Firstly, the firm has an investment in Vertical Bridge (towers), the fourth largest owner of towers in the United States. Secondly, Stonepeak owns Cologix (data centers), which operates 34 data centers in the United States and Canada. Thirdly, the group controls euNetworks (fiber), a bandwidth infrastructure company, owning and operating long-haul networks in Europe. Finally, Stonepeak owns a portion of ExteNet Systems (small cells & DAS), which owns 33.1k small cell & DAS nodes.
Asian Data Center Market – Heating Up
Digital Edge’s expansion in Asia and South Korea is an increasing trend showcased by leaders in the data center industry.
Public Data Center REITs – Expand in South Korea
Below we highlight two recent developments from the largest data center operators in South Korea:
- Equinix entered South Korea for the first time in Q3 2019, investing $70.5m to build-out its Seoul SL1 facility. Additionally, the company notes that it is already evaluating its next data center build in the country.
- Digital Realty plans to enter Seoul, South Korea in Q4 2021, with a $163.8m development project. Specifically, the company is building a 162k sqft carrier-neutral colocation facility; its first for the country.
AgileDC – Colony Capital
AgileDC is a portfolio company of Digital Colony Partners II, which is Colony Capital’s flagship private equity fund. Specifically, the company is a hyperscale data center platform pursuing greenfield data center development activity across seven countries in Asia.
To-date, AgileDC has two projects under construction in Japan, with sites in both Tokyo and Osaka. Additionally, the company is exploring opportunities to enter five additional markets in Asia.