On Thursday, Digital Edge, the Asia-Pacific data center platform backed by U.S. private real assets investor Stonepeak Infrastructure Partners, announced its largest investment in the Japanese market to date. The company’s deal to buy five data center assets, encompassing 5,000 server cabinets and 18.5MW of capacity from Japan IT services giant CTC (Itochu Techno Solutions) was sealed for JPY 26 billion (around $230 billion).
The five data centers are located in Tokyo, Yokohama and Kobe. As part of the transaction, Digital Edge has also acquired the underlying real properties in four of the five locations, on which it plans to pursue new greenfield opportunities to support its growing retail and hyperscale business in Japan.
CTC will remain an anchor tenant across all five data centers, and will work closely with the Digital Edge team to continue to grow the business at each of the facilities.
“Digital Edge is constantly looking for opportunities to continue expanding in Japan. Looking at the enterprise adaptation of cloud services and CTC’s track record and reputation at delivering outsourced IT services, this strategic partnership is a win-win for not only CTC and Digital Edge, but also our customers,” Digital Edge CEO Samuel Lee said in a comment on the deal. “We are excited to deepen our long-term partnership with CTC and to continue supporting their long-term growth from customer demands.”
According to data from Structure Research and provided by Digital Edge, Tokyo’s colocation market is expected to reach $3.4 billion in value by 2026, growing at a 5-year CAGR of 9 percent between 2021 and 2026. Osaka’s market is expected to reach $1.1 billion in value over the same time horizon, with a 5-year CAGR growth of 21 percent. Japan is focused on digital transformation, which drives high data usage due to the increased utilization of applications and platforms, such as data analytics, big data, and artificial intelligence (AI). This will, in turn, drive demand for colocation and new capacity in the country’s key data center clusters, particularly outside the Tokyo and Osaka metropolitan areas such as Yokohama and Kobe.
“These five data centers have been used by a large number of customers for many years. By collaborating widely with existing and new data centers of Digital Edge, CTC will be able to provide more advanced open hybrid cloud services to its customers,” said Eiji Haraguchi, Managing Executive Officer, Director of IT Services Business Group at CTC. “By leveraging Digital Edge’s expertise in data center construction and operations, we are confident that this transaction and the synergy created thereby will accelerate growth opportunities for both parties.”
“Since Digital Edge’s inception, we have been committed to investing in Japan’s digital infrastructure to respond to the market demands in the greater Tokyo and Osaka regions,” said Digital Edge President Kei Furuta. “I am pleased to have this opportunity to crystallize a strategic partnership with CTC, as we look to continue operating, modernizing, and expanding these data centers with the latest technologies.”
