Brazil's V.tal to invest $1 billion in data center subsidiary

By Luciana Magalhaes

SAO PAULO, Oct 17 (Reuters) - Brazil-headquartered V.tal, a global digital infrastructure company, said on Thursday it has created a new unit for its data center business, which will receive an initial investment of $1 billion.

The subsidiary, called Tecto Data Centers, will be responsible for the five data centers that the group has in Brazil and Colombia, as well as for a sixth under construction in Fortaleza in Brazil's northeast.

WHY IT'S IMPORTANT

V.tal is controlled by investment funds from lender BTG Pactual, Singapore's sovereign wealth fund GIC and Canadian pension fund CPP Investments, and does not rule out a potential initial public offering (IPO) in the future.

The company is growing fast to supply the needs of telecom operators and technology companies that provide cloud, content and streaming services in Brazil and abroad.

KEY QUOTES

"Data centers have become very important, and we want to give them the appropriate relevance," said executive Pedro Henrique Fragoso, who will lead the business, adding that around $100 million will be invested in the Fortaleza center.

"V.tal is a big company, and a strong candidate for an IPO," Fragoso said. "At the right time, the company will evaluate going public."

ADDITIONAL BACKGROUND

V.tal has a terrestrial fiber optic network of more than 450,000 kilometers (279,617 miles), in addition to 26,000 kilometers of submarine cables that connect Brazil to Argentina, Chile, Venezuela, Colombia, Bermuda and the United States.

It was established with the purchase of the fiber optic unit of Brazilian telecommunication operator Oi in 2021. The investments in Tecto will be made with its own capital, V.tal said.

($1 = 5.6692 reais) (Reporting by Luciana Magalhaes; Editing by Gabriel Araujo and Mark Potter)