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Foreign private equity and infrastructure funds are shifting their investment strategies toward minority equity stakes and debt financing to scale Indian data centre operators rather than buying companies outright, according to S&P Global Ratings.
The strategy allows global investors to deploy capital rapidly into Indias digital infrastructure while bypassing complex regulatory hurdles linked to full cross-border acquisitions. In its report, Sustainability Insights: Opportunity Versus Risk: The Real Decider Of Data Centre Growth In Emerging Markets, S&P Global Ratings noted that India's market has entered a rapid "capacity-expansion phase," driven by a "shift toward global infra firms and private equity" funding domestic platforms. The agency highlighted that structured financing - including minority equity positions and convertible debt - is helping integrate local operators into global capital networks. Driven by this influx of institutional capital, India's planned data centre project pipeline is now nearly three times larger than its existing capacity. "We expect significant growth across emerging markets in Asia-Pacific, the Middle East, Africa, and Latin America... including large emerging markets like India (2.7x) and Brazil (1.9x)," the report stated. S&P attributed the active deal-making in India to supportive state-level policies, pointing to single-window clearances and land incentives offered in leading industrial states. "State data centre frameworks (example, Gujarat, 2021+): Infrastructure status, single-window clearances, and land/floor area ratio incentives in leading states; but policy varies by state," the report noted. However, the rating agency warned that infrastructure bottlenecks, particularly grid transmission capacity and acute water stress, remain key operational risks for developers in major tech hubs. "State electricity-duty waivers and open-access renewable procurement; but rising AI demand pressures transmission," S&P added, rating India's water resilience as "low" due to groundwater depletion in key urban clusters. (ANI)
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