Companies
CtrlS Datacenters to raise $300 million amid AI-fuelled race for digital infra
Summary
- The company plans to raise $2 billion over the next five years to fuel a 350 MW expansion of its data centres across India and enter overseas markets as well.
Hyderabad-based digital infrastructure provider CtrlS Datacenters Ltd plans to raise debt of $300 million this financial year to expand across India as it anticipates demand for data centres to rise, driven by the increasing use of artificial intelligence.
“Our internal resources themselves are going to be around $700 million which we can use for capital expansion. Plus, we will be raising about roughly around $200 million external equity and rest would come from customers and debt. That's our, about 40% would be coming in the form of debt and the rest is equity and customer advances," said Sridhar Pinnapureddy, founder and chief executive officer at CtrlS Datacenters, in an exclusive interview with Mint.
The fundraise will be part of CtrlS Datacenters’ larger plan to raise $2 billion over the next five years to fuel a 350-MW expansion of its data centres across India and its entry into Southeast Asia and West Asia. He added that the company has acquired land for the data centre in Thailand, and construction will begin within this financial year.
The company currently has 12 data centres in Mumbai, Hyderabad, Chennai, Bengaluru, Noida, Lucknow, and Patna with a total 234-MW capacity.
Read more: How Yotta plans to lure global clients for its AI cloud service
CtrlS Datacenters compete with local and global players, including Bharti Airtel Ltd’s Nxtra, Hiranandani Group-backed Yotta Data Services and Tokyo-headquartered NTT Group.
The rising deployment of artificial intelligence and generative AI in enterprises is expected to increase the computing capacity required exponentially, leading to massive demand for data centres in markets like India and the US.
The massive increase in data consumption and storage, the Indian government’s thrust on data localization, and the need for high-speed bandwidth following the launch of 5G services by telecom service providers are also expected to add to the demand for data centres.
India’s data centre capacity is expected to cross 1,300 MW by the end of 2024, from 880 MW as of June 2023, with nearly 500 MW currently under construction, according to a report by real estate consulting firm CBRE South Asia.
Mumbai, Chennai, and Bengaluru will collectively dominate India’s data centre stock with an 80% share by the end of this year, it added.
Financial services advisory Avendus Capital in a report last year pegged $23 billion in investments towards capital expenditure on data centres in India over the next 10 years.
Read more: Yotta to unveil new Greater Noida, Guwahati data centres in 2024
The Union government plans to implement a policy to encourage firms to build data centre parks, including providing infrastructure status, which will help them access benefits such as long-term credit at easier terms.
CtrlS’ Pinnapureddy said the government should also look at giving sops to the sunrise sector either by abolishing import duties for 100% export-oriented workloads, as the workloads from AI can go to other countries such as the US, Australia or Japan. This is because these workloads are not bound by localization laws as opposed to those from traditional industries like banking, finance and insurance that have fuelled the need for data centres till the previous decade.
"If the government can institute an expert committee looking into what this industry needs and what it takes for India to get a large chunk of those workloads, India could benefit immensely. There will be a big growth in allied sectors like manufacturing could pick up significantly because data centers consume a lot of infrastructure elements," he added.
He added that state governments could create infrastructure to ensure power supply at affordable rates, even as data centre providers move to green energy to support their energy requirements.
"We are investing significantly in our transition to solar power. The idea is to go towards net zero by 2030. We're already halfway through there, I think 50-60% of our capacities from this month onwards are on solar. The idea is to go 100% by 2030 and also bring down the energy costs," he added.
