New investments show strength of Brazil's datacenter market

New long-term, multi-billion dollar announcements for datacenter expansions in Brazil show that the country remains a driving force for this industry in Latin America in light of current and future computational demands, such as those brought about by generative AI.

Three major initiatives were disclosed last week.

Scala announced a megaproject in Rio Grande do Sul state that could reach up to US$50 billion in investments and 4.7GW of power capacity. Considering indirect investments and works by third parties in the area, the campus could hit US$120bn in investments.

Initially, however, the company controlled by US fund DigitalBridge is committing 3bn reais (US$544 million) and 54MW in the first phase of the complex.

Public cloud market leader AWS, in turn, pledged to invest 10.1bn reais in the expansion of datacenters in São Paulo state over the next 10 years. AWS currently operates a cloud region in São Paulo, with three availability zones (unique datacenters).

Finally, development bank BNDES announced a credit line of 2bn reais to finance datacenters in the country.

In addition to these projects, BNamericas has learned from market sources that a new investment by an existing player in Rio de Janeiro is due to be announced in coming weeks.

This announcement will add to ongoing expansions in the state implemented by Equinix, CloudHQ's first Rio de Janeiro complex, new projects by Cirion, and to the announcement by Açu port of a plan to attract datacenter investments to the industrial complex, among other initiatives.

In São Paulo state, Microsoft is planning a datacenter in Limeira city, as exclusively reported by BNamericas, reinforcing its existing cloud region in the state and adding to the ongoing and previously reported construction of datacenters in Hortolândia and Sumaré.

Also in São Paulo, Elea Data Centers, formerly Elea Digital, is working on a new datacenter campus in São Bernardo do Campo in the state capital’s metropolitan region.

Elea is targeting the creation of a 100MW complex in the city, with three datacenters.

Overall, BNamericas has learned from market sources that Elea’s investment in São Bernardo could surpass US$1bn, including the price for the purchase of 100MW in the market.

FUNDING AND M&A

In addition to these projects, large investors continue moving toward the Brazilian and Latin American data markets.

The expectation is that new issuances, including of green bonds, will be announced in the coming months to finance these expansions.

On a global basis, Equinix has just issued another US$750mn in green bonds via two offerings to advance expansions backed by sustainability initiatives.

On the M&A front, BNamericas has learned that a large US fund hired a German bank to seek investors and carry out the exit of its datacenter company that operates in Latin America, mainly in Brazil.

The movement does not necessarily represent a divestment due to the lack of the company's business sustainability, but could be related to the maturity and size that these assets have reached.

BNamericas estimates that the Brazilian market currently has just over 500MW of IT capacity in use. Considering capacity leased but not necessarily in use, this workload would be close to 700MW.

And considering the future projects announced, Brazil should soon surpass the symbolic 1GW barrier in datacenter capacity.