Digital Edge (Singapore) Holdings Pte. Ltd. has acquired five data centre assets from Itochu Techno-Solutions (CTC) (TSE: 4739) for a total purchase price of approximately US$230 million (JPY26 billion), representing Digital Edge’s largest single investment in Japan to-date.

The transaction accounts to 5,000 cabinets and 18.5MW of capacity. This will bring Digital Edge’s total MW capacity in Japan to approximately 38 MW.

The five data centres are located in Tokyo, Yokohama and Kobe and 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 is to remain an anchor customer across all five data centres, and will work with Digital Edge to continue to grow the business at each of the facilities.

Samuel Lee, Chief Executive Officer of Digital Edge, said: “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.”

Commenting on the transaction, Eiji Haraguchi, Managing Executive Officer, Director of IT Services Business Group, CTC, said: “These five data centres have been used by a large number of customers for many years. By collaborating widely with existing and new data centres of Digital Edge, CTC will be able to provide more advanced open hybrid cloud services to its customers.

“By leveraging Digital Edge’s expertise in data centre construction and operations, we are confident that this transaction and the synergy created thereby will accelerate growth opportunities for both parties.”

According to Structure Research, Tokyo’s colocation market is expected to become a $3.4 billion market by 2026, growing at a 5-year CAGR of 9% between 2021 and 2026. Osaka’s market is expected to become a $1.1 billion market over the same time horizon, with a 5-year CAGR growth of 21%.

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 the demand for colocation and new capacity in the country’s key data centre clusters, particularly outside the Tokyo and Osaka metropolitan areas such as Yokohama and Kobe.