NTT Unit Said to Seek $1 Billion to Develop Data Centers in US

NTT Global Data Centers , a unit of Japan’s NTT Inc., is seeking at least $1 billion in fresh capital to fund development projects in the US, according to people with knowledge of the matter.

The company is working with Citigroup Inc. to raise the money by selling stakes in a development company for new data center projects in the US, said the people, who asked not to be identified as the information is private. It may increase the size of the equity offering depending on investor demand and could also raise a credit facility, the people said.

The firm, which is the world’s third-largest data center provider outside of China, has started sending out marketing materials to prospective long-term investors, such as pension and infrastructure funds, the people said. A formal sale process is likely to kick off in the coming weeks, they added.

The establishment of a development company, which owns and manages pre-revenue early-stage assets, gives data center builders the flexibility to target a broader pool of long-term investors. The investors, meanwhile, can demand higher returns for taking on the risk of the projects.

Deliberations are at an early stage, and details such as timing and the size of the fundraising could change. Representatives for NTT GDC and Citigroup declined to comment.

NTT GDC announced last year that it has secured land across North America, Europe, and Asia to support nearly a gigawatt of planned data center capacity. The sites include new markets like Milan in Italy. In existing markets such as the US, it bought land in Hillsboro, Oregon and Phoenix, Arizona.

The firm is working on 34 projects that will double its capacity in as soon as two years and will achieve a capacity “well over five gigawatts” in five years, chief executive officer Doug Adams said in an interview in March.