Data Centers' Rise
TCS's significant $6.5 billion investment in AI data centers is more than a financial commitment; it underscores a broader strategy to develop capabilities
and address the increasing digital demands of India. This strategic move is also aimed at preventing any potential 'tech colonization'. The company's CEO, K. Krithivasan, stated that TCS aims to become the foremost AI-led services provider globally. Funding for this initiative will come from a mix of both equity and debt. TCS has partnered with a financial investor, providing flexibility and control over its growth trajectory and strategic partnerships, thus enhancing its business model. The initiative's strong focus on India also opens doors to global opportunities alongside existing clients.
Capital Flows Shift
Private capital is playing an increasingly crucial role in expanding India's digital infrastructure, fueled by a surge in demand. According to Prateek Jhawar, Managing Director and head of infrastructure and real assets investment banking at Avendus Capital, institutions such as Apollo, Blackstone, and CPP Investments are structuring long-term debt backed by contracted hyperscaler cash flows. The ecosystem is being reshaped by bespoke capital structures, as highlighted by recent deals. Data centers are now being treated more like core infrastructure assets due to strong demand drivers, rather than just technology real estate. Recent deals include Digital Realty’s $7 billion joint venture with Blackstone, Aligned’s $1.7 billion private credit raise, and EdgeCore’s $1.9 billion financing. This convergence of AI-driven demand, predictable cash flows, and tangible asset characteristics is transforming data centers into a defining infrastructure story for the upcoming decade.
India's Investment Boom
India's data center capacity is anticipated to exceed 2,000 MW within the next two years, necessitating an estimated $3.5 billion in incremental investment, according to Prateek Jhawar. Companies like AdaniConneX, Yotta Data, and CapitaLand have collectively raised $2 billion to fund hyperscale campuses across cities like Mumbai, Chennai, and Hyderabad. A Barclays report predicts that India could potentially attract around $19 billion in data center investments by 2030, exceeding the $12 billion received last year. Sanjeev Dasgupta, CEO of CapitaLand Investment India, explained that demand is driven by hyperscalers and major enterprise customers, including banks and financial institutions. Hyperscalers are expanding at a faster pace due to the growing AI plans within India and other markets, highlighting the rapid growth and the strategic importance of this sector.
