EdgeConneX has lined up $1.7 billion in sustainability-linked loans, which the company says will “dramatically improve” its credit profile and burnish its focus on environmental stewardship. The funding also provides EdgeConneX with the capital to continue a global expansion that has seen the company enter new markets in China, India and Indonesia in recent months.
The financings include the first use of asset-backed securitization (ABS) for EdgeConneX, as well as a multi-currency term loan to further the company’s global growth. In an asset-backed securitization, a developer uses the equity and cash flow from a pool of properties to secure a loan. Because builders have data centers in various stages of development, some of these assets can qualify for a lower interest rate than the entire portfolio.
“The investment-grade rating for the asset-backed securities demonstrates the financial strength of EdgeConneX and confirms the confidence and quality of the EdgeConneX edge business model,” said Joe Harar, CFO at EdgeConneX. “This new financing affords the company high flexibility to not only invest in our core infrastructure in a sustainability-minded way but also to support our high growth customers that need green, sustainability-linked solutions hyper-locally and at hyperscale globally.”
Greening Infrastructure from Edge to Cloud
The EdgeConneX platform began with a network of edge data centers in second-tier cities, and now extends to hyperscale campuses in major markets across the U.S., Europe and Asia. The company’s expansion has been supported by EQT Infrastructure, the global fund which acquired EdgeConneX in 2020.
As a result, EdgeConneX already had an investment-grade credit profile, with is accompanied by lower interest rates. The new loans will lower the company’s cost of capital even further, while allowing EdgeConneX to deploy more data center capacity in both new and existing markets.
The sustainability-linked financing furthers the company’s focus on reducing environmental impact across its global footprint. EdgeConneX says its goal is to be a carbon-, waste- and water-neutral data center provider by 2030 and operate a data center platform powered by 100% renewable energy.
Recent headlines have brought climate risk to the fore, prompting customers to focus on eliminating fossil fuels from their IT footprint. This coincides with growing interest in sustainable finance, as investors seek to align their portfolios with climate resilience. In our 2021 forecast, Data Center Frontier highlighted sustainable financing as one of the eight trends that would shape the digital infrastructure industry
A sustainability-linked loan (SLL) is a debt instrument that ensure a company’s overall ESG performance through sustainable performance targets agreed upon by the company and its investors. Over the past several years, a series of data center providers have adopted sustainable finance strategies by issuing either green bonds or SLLs, including Aligned, Flexential, Vantage Data Centers, Digital Realty and Equinix.