TCS and TPG Partner for INR 18000 Crore AI Data Center Investment

Tata Consultancy Services Limited has announced a strategic partnership with TPG Terabyte Bidco Pte. Ltd. for a significant investment in HyperVault AI Data Center Limited. The partnership involves a total investment of up to INR 18000 crore into HyperVault, which is a wholly owned subsidiary of TCS. The investment will be executed through a Securities Subscription Agreement and a Shareholders’ Agreement, with both parties committing to fund the development of AI data centers in India.

The financial terms of the agreement specify that TCS and TPG will invest in a 51:49 ratio. The total commitment of INR 18000 crore will be infused in tranches over the next few years. TPG’s investment is expected to result in a shareholding of between 27.5% and 49% in HyperVault. The funding will be distributed across equity share capital and multiple tranches of compulsorily convertible preference shares. The investment includes a lock-in period of three years, during which neither TCS nor TPG can transfer securities, except to affiliates.

The operational scope of the agreement focuses on the development, ownership, operation, and management of data centers and associated infrastructure in India. These centers are designed to support both AI and non-AI workloads. HyperVault will serve as the exclusive vehicle for this business, subject to certain exceptions outlined in the transaction documents. The data centers will feature high rack densities, energy efficiency, and network connectivity across key cloud regions.

The timeline for the investment spans several years, with funding to be provided in multiple tranches. The agreement specifies that the investment will be subject to conditions precedent and statutory approvals. The transaction documents outline the terms and conditions for the phased investment, ensuring compliance with regulatory requirements.

The parties involved in this transaction include Tata Consultancy Services Limited, TPG Terabyte Bidco Pte. Ltd., and HyperVault AI Data Center Limited. TCS will have the right to appoint the majority of directors on the board of HyperVault, while TPG will have the right to appoint up to two directors, subject to customary thresholds. TPG Terabyte is not a related party of TCS or HyperVault as of the agreement date but will become a related party upon the transaction’s completion.

The market context for this investment is driven by the growing demand for AI-ready data centers. India’s data center capacity is projected to exceed 10GW by 2030, with significant investments in the sector since 2019. The partnership between TCS and TPG aims to capitalize on this demand by providing infrastructure for hyperscalers, AI companies, and other enterprises requiring advanced data center capabilities.

TPG is a global alternative asset management firm with a diversified investment strategy. The firm invests across private equity, impact, credit, real estate, and market solutions. TPG’s involvement in the HyperVault project is facilitated through its TPG Rise Climate and Global South Initiative, focusing on sustainable and innovative infrastructure development.

Tata Consultancy Services Ltd is a leading global IT services, consulting, and business solutions organization. The company is committed to delivering long-term value through digital transformation and technology services. TCS continues to expand its capabilities in AI and data center infrastructure, aligning with its strategic priorities to support industry-leading organizations worldwide.