PGIM Real Estate and Equinix, Inc. (Nasdaq: EQIX) have agreed to establish a US$575 million joint venture in the form of a limited liability partnership to develop and operate two xScale data centers in Sydney, Australia.

Under the terms of the agreement, PGIM Real Estate, the real estate investment and financing arm of Prudential Financial’s global asset management business, will control an 80% equity interest in the joint venture (JV), and Equinix will own the remaining 20% equity interest.

The JV is expected to close in Q4 2021, pending regulatory approval and other closing conditions.

The facilities, which will be known as SY9x and SY10x, are expected to provide more than 55 megawatts (MW) of power capacity to serve the core workload deployment needs of a targeted group of hyperscale companies, including the world’s largest cloud service providers, the parties said.

The first xScale data center in Sydney – SY9x is expected to open in Q1 2022.

Eric Adler, Chief Executive Officer, PGIM Real Estate, added: “We are extremely pleased to partner with Equinix on this investment in Sydney, and we look forward to expanding this strategic relationship in other markets, thereby providing our investors further access to the increasingly important digital infrastructure sector.

“This is a highly symbiotic venture between two market-leading firms with complementary business models and global capabilities.”

Combined with Equinix’s existing hyperscale joint ventures in Europe, Asia-Pacific and the Americas, this joint venture will bring the global xScale data centre portfolio to more than $7.5 billion across 34 facilities, and an expected greater than 675 MW of power capacity when completed and fully constructed. 

To date, six xScale data centres have been opened in Asia-Pacific, EMEA and LATAM, including TY12x in Tokyo, PA8x and PA9x in Paris, LD11x and LD13x in London, and SP5x in São Paulo, with more currently under development.

Charles Meyers, President and CEO, Equinix, said: “As digital transformation accelerates across all industries, hybrid multicloud is becoming the IT architecture of choice for leading businesses. These companies recognize that digital infrastructure is a source of competitive advantage, and they are leveraging Platform Equinix to directly connect and operate close to the largest cloud companies powering this infrastructure.

“Our new relationship with PGIM Real Estate follows our successful partnership with GIC and will enable the world’s largest hyperscalers to expand within the Equinix ecosystem in Australia.“

Citi served as exclusive financial advisor to Equinix in connection with this transaction.