Private equity firm TPG has committed to invest as much as $1 billion (Rs 8,820 crore) in an AI data centre joint venture with Tata Consultancy Services Ltd, India’s biggest software services exporter.
The commitment is part of an investment of Rs 18,000 crore in the JV, HyperVault AI Data Center Ltd, where TCS will hold a 51% stake and TPG will own between 27.5% and 49%, the Indian company said in a statement.
This is the third business association between the Tata Group companies and TPG. In 2021, TPG invested Rs 7,500 crore ($1 billion) in Tata Motors’ EV arm for an 11-15% stake. It later acquired a 9% stake in Tata Technologies for Rs 1,467 crore ahead of its IPO, though it has since pared holdings through open-market sales.
TCS said that HyperVault will issue equity shares and compulsorily convertible preference shares to the company and TPG for a total of up to Rs 18,000 crore over the next few years, in multiple tranches.
HyperVault’s planned gigawatt-scale AI-ready infrastructure will get a boost from this investment, which aligns with TCS’ strategy to develop data centres exceeding 1 GW capacity in the coming years. HyperVault will exclusively deal with the business of TCS subject to certain exceptions.
The investment will have a lock-in period of three years during which neither TCS nor TPG will be able to transfer the securities except to affiliates. TCS will have the right to appoint the majority of the directors on the board of HyperVault, and TPG will have the right to appoint two directors.
TPG’s investment will come via its Rise Climate fund and Global South Initiative, launched with UAE climate investment fund ALTÉRRA, alongside its Asia Real Estate arm.
TPG Rise Climate is a 2021 vintage PE fund that provides growth-stage capital to entities operating in clean energy and greening industrials, among others. GSI, housed under TPG Rise Climate, seeks to attract institutional capital to private-equity investments in high-growth climate opportunities.
TCS was advised by AZB & Partners and Deloitte Touche Tohmatsu India LLP. TPG was advised by Cyril Amarchand Mangaldas, Latham & Watkins LLP, and Price Waterhouse & Co. LLP.
