Inside Brazil’s data centre surge: what global investors need to know

Brazil’s data centre sector is undergoing transformative expansion. With surging demand, favourable regulation and a renewable-powered grid, the country offers strategic opportunity for institutional investors. However, it is important for global investors to adopt the right approach for long-term success.

Brazil is emerging as a leader in Latin America’s race for data centre capacity, fuelled by surging digital demand, cloud adoption and data localisation regulations like the LGPD (General Personal Data Protection Law).

Global investors, especially infrastructure funds and multinational hyperscalers, are targeting hubs such as São Paulo and Rio de Janeiro, while domestic players are scaling rapidly to offer national reach. Supporting this momentum is Brazil’s large base of internet users, the highest in the region, combined with strong digital consumption and increasing demand for low-latency, localised infrastructure.

Investors see the Brazilian data centre sector as a hybrid asset class with solid fundamentals and steady cash flow, but with exposure to continuous innovation and rising global demand.

Piemonte Holding is a professional investor focused on digital infrastructure in Brazil and Latin America. As their Investment Director, Victor Almeida, puts it, “Investing in Brazil’s digital infrastructure offers a rare combination of attributes: the revenue stability of infrastructure with the upside growth of the technology sector.”

Timing is everything

The global mismatch between data centre supply and demand is particularly acute in Brazil. With accelerating uptake of AI, cloud platforms and automation, infrastructure is under strain, making this moment unusually attractive for strategic, long-term investment.

Fernando de Angelo, Strategy Director at Piemonte Holding, notes, “Investing now means capturing the expansion cycle of an industry that is the backbone of both digital and energy transformation. Data centres are also a crucial link in the sustainable technology chain, connecting the growth of AI and the digital economy with advances in energy efficiency and decarbonisation.”

Brazil’s strong fiscal incentives further highlight the importance of timing. Federal and state governments have recently introduced schemes such as Redata – a national tax regime that eliminates or suspends federal levies on data centre equipment – and new financing lines dedicated to digital infrastructure offered by the country’s federal development bank, BNDES.

A supportive ecosystem for data centre growth

Brazil offers an attractive blend of technical and economic advantages:

• Energy mix – some 90% of Brazil’s energy comes from renewable sources, including hydro, wind and solar, which supports both ESG goals and operational resilience.
• Connectivity – high-quality peering ecosystems and undersea cable landings in Brazil ensure strong international links with low latency.
• Customer proximity – the presence of AWS, Azure and Google Cloud in the country supports anchor tenancy and de-risks investment in new capacity.
• Policy alignment – public support for AI and digital infrastructure development is growing, with tax reliefs, financing incentives and simplified regulations.

Brazil also benefits from political neutrality and growing digital sovereignty. “For years, much of the data generated by Brazilian users was processed in the USA,” says de Angelo. “Now, with improved regulation and local investment, the country will host its own data domestically.”

“The alignment of modern infrastructure, contractual stability and clean energy creates ideal conditions for partnerships between Brazilian investors and global technology companies,” adds de Angelo.

Strategic appeal for institutional capital

The Brazilian data centre market is increasingly seen as offering investable, long-horizon infrastructure assets. Contract structures tend to be long-term and dollar-denominated, providing inflation protection and currency hedging in a local market context.

“The data centre sector in Brazil is one of the few where you can gain exposure to dollar revenues in a localised setting,” says Almeida. “You get stability and predictable cash flow, anchored by global counterparties.”

Beyond equity, Brazil’s maturing capital markets are playing a growing role in project finance. For example, Piemonte portfolio company, Elea Data Centers, has issued multiple sustainability-linked bonds (SLBs), tying returns to targets such as improved energy efficiency and leadership gender diversity. Its most recent R$790m SLB was supported by major national and international banks and illustrates how domestic capital is becoming a key enabler of digital growth in Brazil.

Meeting new energy and sustainability demands

Driven largely by the AI boom, data centre energy demands are skyrocketing. The need for higher-density data centres with liquid cooling and energy-efficient design is critical, and Brazil’s energy profile offers several advantages here.

“Brazil is the only G20 country whose power matrix is predominantly renewable,” says Almeida. “This gives it a structural advantage for building high-density infrastructure without increasing carbon emissions.”

“At Elea, for example, all facilities already run on certified renewable energy, and new builds are designed for minimal water use. This is not just operational best practice; it aligns with investor expectations. ESG-linked structures, such as SLBs, tie financial performance to environmental and social outcomes,” Almeida adds. “It’s an investment-grade sustainability model.”

Capital efficiency and investor alignment

While data centres are capital-intensive, risk-adjusted returns remain strong. Predictable revenues, take-or-pay contracts and counterparty credit quality are key differentiators.

“Our agreements with global platforms are structured for long-term visibility,” says Almeida. “This transforms a technology asset into something with the financial profile of traditional infrastructure.”

New financing models are also emerging. DevCo/OpCo structures, which separate development risk from operational cash flow, are gaining traction in Brazil. These enable the involvement of different investor profiles: higher-risk capital in the build phase, institutional capital once assets stabilise.

Elea’s strategy also reflects capital discipline. “From the start, Elea pursued an expansion strategy based on selective acquisitions and capital efficiency,” Almeida adds. “This enabled it to grow quickly, nationwide, while keeping cost per megawatt below industry standards.”

Regulatory and operational complexities

Despite its attractions, Brazil requires careful navigation. Federal, state and municipal tax regimes differ widely, and often involve performance conditions linked to jobs, renewables or local sourcing. Investors must secure approvals and incentive agreements early to ensure financial viability.

Permits and environmental licensing – especially at state level – can add time and risk to project timelines.

Brazil’s legal and compliance landscape is complex but in the process of being modernised. Investment vehicles such as FIP (Fundo de Investimento em Participações) offer tax efficiency for infrastructure projects, but come with regulatory requirements on governance, investor eligibility and disclosures. Compared with offshore vehicles, FIPs offer reduced tax risk, but require greater onshore compliance.

Practical considerations for new investors

Entering Brazil’s digital infrastructure market requires strategic alignment and local insight. Global investors should:

• Pair an offshore master fund with a local FIP or SPV to capture tax benefits
• Secure long-term tenant commitments before full capital deployment
• Negotiate state-level tax incentives and confirm Redata eligibility early
• Budget for grid connections and permitting contingencies
• Engage experienced local partners to manage compliance and operations
• Demonstrate local value creation through employment, skills development and community engagement

For investors seeking a mix of stable returns, strategic growth and real-world impact, the Brazilian data centre sector stands out. The challenge is navigating its complexity. Investors who act early, with the right partners and structures in place, will be best placed to capitalise on the country’s digital transformation.

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