TCS signs up with TPG for Rs 18,000 crore data centre play; PE firm commits Rs 8,820 crore

TPG will be the only equity partner in the venture, and invest $1 billion or around Rs 8,820 crore in the AI data centre business christened as 'Hypervault'. It will hold a stake between 27.5-49% in the venture.

Mumbai: The country's largest IT services company TCS on Thursday announced a tie-up with private equity major TPG for its upcoming data centre business, in which both the partners aim to pump in equity of around Rs 18,000 crore.

TPG will be the only equity partner in the venture, and invest $1 billion or around Rs 8,820 crore in the AI data centre business christened as 'Hypervault'. It will hold a stake between 27.5-49 per cent in the venture.

The deal comes within 40 days of the Tata Group company announcing its entry into the data centres business with a plan to have a 1 GW capacity, which would require investments of $6.5 billion (around Rs 57,600 crore).

The company is looking to house the data centres in Navi Mumbai, Hyderabad and Chennai, and aiming to construct the capacity in up to five years, officials said. Land on which capacity gets built may be either from TCS or Tata group, or even freshly acquired.

Speaking with PTI, TCS chief executive and managing director K Krithivasan said that both the partners are investing $2 billion in core equity, and added that the rest of the funding will come in form of debt from lenders.

There is no plan to rope in any other equity partner beyond TPG, he said.

Getting TPG as an investment partner will help TCS drive stronger returns to its shareholders, reduce its capital outlay, and create long-term value for the data centre platform, a statement said.

"I am delighted to have TPG join us in our journey to build large GW-scale AI data centres in India, tapping the rapidly growing AI demand. It will further strengthen our partnership with hyperscalers and AI companies," Tata Sons Chairman N Chandrasekaran said.

He added that with this capability, TCS is uniquely positioned to deliver complete AI solutions for its customers and partners.

Krithivasan said TCS, which already serves a large part of the ecosystem, including hyperscalers like AWS and customers using AIC, has a "right to win" in the market as it will be able to deliver an end-to-end solution to customers.

Data centre opportunity arising out of data localisation norms and rising digital consumption has piqued the interest of a slew of Indian corporate houses, including the Ambanis and Adanis, who have also announced GW-scale capacities in the recent past.

Krithivasan said TCS does not look at this as a real estate play, but as a synergistic aspect. He added that the broader Tata group ecosystem - the conglomerate has arms engaged in subsea cables, renewable power, real estate and even construction - will be of help in the new business.

"Data centres are a multifaceted asset class and sit at the intersection of green energy infrastructure, technology and real estate," Jim Coulter, executive Chairman of TPG and a managing partner of TPG Rise Climate, said.

TPG's investment in HyperVault is being facilitated through TPG Rise Climate and its Global South Initiative, a private equity strategy launched in partnership with ALTERRA, the statement said.

The firm is also partnering through its Asia Real Estate business, marking an important milestone for the platform in India, it added.

AI-data centres play a crucial role by providing the necessary infrastructure to hyperscalers, AI companies, private enterprises and the public sector, for hosting their compute hardware, high-speed storage, and low-latency networks needed to run real-time, large-scale AI models and applications across industries, the statement explained.

At present, the overall capacity in India stands at 1.5 GW which is expected to surge to 10 GW by 2030, and the datacenters market has attracted investments of over $94 billion till now, it said.

Krithivasan said the investments in building capacity will be based on the demand it sees, and some of it will also be ahead of the curve investment.

"At this time, what we are going to offer to the market is a passive data centre. But if there is an opportunity, if we have to look beyond the passive data centre, we will be happy to do that," he said.

When asked about TCS's plans for Hypervault and if a public listing is on the cards later, he said the current focus is on building the business.

Both partners have committed to a three-year lock-in on the investment, as per an exchange filing.

The TCS scrip closed 0.05 per cent down at Rs 3,145.75 a piece on the BSE as against gains of 0.52 per cent on the benchmark.