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TCS shares gained on Friday's trading session after it bagged $1 billion from TPG to accelerate its data centre business, HyperVault.
TPG is a global investment firm that manages private equity, credit, real estate, and growth funds, investing in companies across industries worldwide.
What’s brewing: the two companies and TPG will together invest up to $2 billion (₹18,000 crore) to build a huge, AI-ready data centre.
Out of this, TPG will put in $1 billion (₹8,820 crore) and will get a 27.5% to 49% share in the project. TCS will provide the remaining money through a mix of its own funds and loans.
The why: this partnership helps increase profits for shareholders and reduces the amount of money TCS has to invest on its own. It also speeds up the growth of HyperVault, which plans to expand to more than 1 gigawatt of capacity in the next few years.
This is the first time TCS is getting into a business that needs such a big upfront investment. Usually, TCS prefers to grow on its own instead of buying other companies, in fact, the last big company it bought was Citigroup Global Services back in 2008 for $512 million.
Big theme: India’s data centre capacity is expected to grow five times and reach 8GW by 2030 because people and businesses are using much more data and more cloud services.
Rules that require companies to store data within India and the rapid rise of artificial intelligence (AI) are also pushing this growth, according to a report by Jefferies.
