Digital Colony Group invests in the expansion of data centers

Scala and Highline owner plans to be the biggest provider of digital infrastructure of Latin America

Marcos Peigo

Marcos Peigo, of Digital Colony: “The combination of data center, optical fiber and towers is what moves the economy” — Photo: Silvia Zamboni/Valor

Cellular towers, optical fiber networks and data centers make up the pillars of the American group Digital Colony in order to become the biggest investor in digital infrastructure of Latin America. Besides buying Oi towers for R$ 1 billion, at auction won last Thursday by its controlled Highline, the Group advances building data centers in Brazil, Chile and Mexico through its company Scala Data Centers; and it bets on renewable energy to feed the operations.

“The pandemic only highlighted our thesis that the combination of data center, optical fiber and cellular towers is what moves the economy”, says Marcos Peigo, CEO of Scala Data Centers and partner of Digital Colony in Latin America.

By 2026, Scala will have invested in four new data centers in its Tamboré campus, in Barueri (SP), where it is located its first data center. The company has ensured 150.000 square meters in the site and it will account with a total capacity of 117 megawatts, being 86,6 MW with the new operations. Megawatts is the most common used measure to dimension the business of data center infrastructure provision, in which Scala works.

The company doesn’t disclose investments, but Valor verified that it is spent in average US$ 7 million per megawatt to build a data center infrastructure. Considering this amount, the investments on the site must be around R$ 3 billion.

The resources are adding to around R$ 2.3 billion already invested this year by Scala in the purchasing and modernization of two data centers that belonged to UD Technology, of UOL Diveo. A second campus, besides Tamboré, should be announced by the company in the country of São Paulo in 2021.

Scala business model is to offer all the infrastructure – space, energy supply, high speed connection etc. – to accommodate machines of big providers of computer services in clouds like Amazon, Google and Microsoft, integrators and big companies like banks, insurance companies and brokers.

In the first trimester of 2021, the third data center of the company, the SP3, starts operating in Tamboré dedicated to a great provider of cloud services. The campus still counts with two dedicated substations of transmission and distribution of energy and a control center for Latin America.

“We are looking at a market still poorly served in relation to its capacity”, says Peigo. “Only 20% to 25% of the businesses data load migrate to the cloud. That justifies a large growth potential.”, states Scala CEO

The company also starts the construction of two campuses in Chile and other two in Mexico. According to Peigo, the expectation is to activate one data center in each country in the third trimester of 2022, with 32 MW of initial capacity each. In total, the company plans to have eight data centers and two substations of 150 MW dedicated in each country.

In order to select the sites in both countries in the middle of a pandemic, the company counted on the support of consultings, local engineering companies and even Google Earth. “The pandemic brought all the difficulties you can imagine to raise capital, to hire personnel and find the sites, but it was great learning”, says the executive.

The competition is also expanding their activities in Latin-American. Last week, Ascenty opened its first data center out of Brazil, in Santiago, and the operation of a second in Vinhedo (SP), where its campus reaches 70 MW of capacity. Ascenty accounts for 17 data centers in operation and has announced the construction of other five, including a second one in the Chilean capital, two in Mexico, besides the units in São Paulo and in Rio de Janeiro.

Another competitor, Odata, that belongs to Pátria Investimentos fund – the same that sold Highline to Digital Colony in December last year – is going to build a unit in Mexico, expected to begin in 2022. Odata has three data centers in Brazil, one in Colombia and it also intends to enter in Chile.

Reducing the energy consumption and work with renewable sources is a Scala concern, that intends to make this a differential for its clients. “The company is the first one in the Americas to close an agreement with a certificate of energy 100% renewable”, states Peigo.

The agreement of ten years was signed with AES, in Brazil, and with Engie, in Chile, at the minimum amount of R$ 400 million. “It costs money, changes the stakes in the market, but it is a commitment within our Environmental, Social and corporate Governance directive”, observes the executive.

The company, which has hired 100 people in the last six months and must reach 163 employees by the end of the year, has also signed a partnership with Senai in order to train students of technical level and open an internship program linked to the course. Marcos Peigo envisions that 100 young students have access to the theory with Scala and Senai professionals and to the practice in the company’s data centers.

The ambitious American group that controls Scala and Highline has as a goal to make the digital transformation of its assets. The movement began in 2017 with the co-creation of the investment fund Digital Colony Partners, by Digital Bridge Holdings, manager of digital infrastructure assets, allied to Colony Capital inc., open capital investment company in the New York stock market (NYSE) that has the real estate market among its main assets.

In July 2019, Colony Capital decided to acquire Digital Bridge, transformed Digital Colony in a subsidiary and had its founder, Marc Ganzi, in charge of Colony Capital, indicating that digital assets are a priority in the group. Tom Barrack Jr., that lifted Colony in 1991, gave his seat to Ganzi and follows as the president of the board.

Peigo explains that the public strategy of Colony Capital is to have 90% of its total assets invested in digital infrastructure administrated by Digital Colony by the end of 2021. The amount of digital assets would represent R$ 41.4 billion considering the total od R$ 46 billion until the end of September. “The value must be even higher considering the new capitations and the growth of our portfolio”, says the partner of Digital Colony.

In May, according to Bloomberg information, Digital Colony opened a second round of investment acquisition of more than U$ 6 billion. The group had already acquired U$ 4.05 billion in July last year.