TCS and TPG announce partnership to invest $2 billion into data center subsidiary HyperVault

TCS believes bringing TPG as a strategic investment partner will help drive stronger returns to its shareholders, reduce its capital outlay, and create long-term value for the data center platform.

Tata Consultancy Services (TCS) on November 20 announced that it will be investing $2 billion (Rs 18,000 crores) along with global alternate asset management firm TPG to fund its AI data center business, HyperVault. The investment will happen in tranches over the next few years.

TCS has secured $1 billion (~ Rs 8,820 crores) in equity investment from TPG. HyperVault will be funded through a mix of equity from TCS, TPG and debt.

As per the agreement, out of the total commitment of up to Rs 18,000 crore, TPG will invest up to Rs 8,820 crore in HyperVault and will eventually have a final shareholding of between 27.5 per cent and 49 per cent. The remaining will be invested by TCS.

TCS believes bringing TPG as a strategic investment partner will help drive stronger returns to its shareholders, reduce its capital outlay, and create long-term value for the data center platform.

“The investment will support HyperVault’s GW-scale AI-ready infrastructure build and aligns with TCS’ plan to create AI-ready data centers with capacity in excess of a GW over the next few years,” the company said in a statement.

N. Chandrasekaran, Chairman, TCS, said, “I am delighted to have TPG join us in our journey to build large GW-scale AI data centers in India, tapping the rapidly growing AI demand. It will further strengthen our partnership with hyperscalers and AI companies. With this capability, TCS is uniquely positioned to deliver complete AI solutions for its customers and partners.”

Jim Coulter, Executive Chairman of TPG and a Managing Partner of TPG Rise Climate, added, “We are excited to partner with TCS and are grateful for our long-standing partnership with the Tata Group, both who share our vision and commitment to innovation and sustainability."

"We look forward to bringing TPG’s sectoral expertise across these asset classes and working together with TCS to drive India’s next wave of digital infrastructure innovation in a climate-positive manner and build a more resilient future for the country’s digital and data economy," Coulter said.

TCS’ HyperVault will large-scale AI-ready infrastructure for hyperscalers and AI-driven organizations. It will work closely with hyperscalers and AI companies to design, deploy, and optimize AI infrastructure, enable better delivery of AI services.

In October, TCS announced a massive plan to enter the data centre space with an aim to build up to 1 GW of capacity, which will entail over $6.5 billion in investments. On October 30, the IT services giant floated wholly-owned subsidiary HyperVault Data Centers.

TCS was advised by AZB & Partners as legal counsel, and Deloitte Touche Tohmatsu India as tax advisors. TPG was advised by Cyril Amarchand Mangaldas and Latham & Watkins as legal counsel, and Price Waterhouse & Co. as tax advisors.