Gaw Capital Partners is looking to raise a new fund to build a portfolio of internet data centres (IDC) outside China, after the Hong Kong-based private fund manager, earlier this year, closed its China-focused IDC investment platform at $1.3 billion, according to a company executive.
The IDC industry is “a clear beneficiary” as the COVID-19 pandemic has forced people to spend more time at home to work, study, entertain, and shop online, said Kenneth Gaw, President and Managing Principal of Gaw Capital, at DealStreetAsia’s Asia’s PE-VC Summit on Tuesday.
“Even before COVID, we saw a secular growth of demand for data centres amid technology advancements in 5G, AI, cross-border e-commerce, online learning, and gaming.”
The proposed fund, which has yet to be officially launched by Gaw Capital, could help the firm capture opportunities in IDC investments outside of mainland China.
A major part of the fund is likely to focus on North Asia, including markets like South Korea, Japan, Hong Kong, and Taiwan, said Gaw. While the overall IDC market in Southeast Asia is not as large, he said that the fund will certainly look into opportunities in Singapore, Indonesia, and some other jurisdictions in the region.
Gaw said that the firm’s Capital Markets team is still finalising the fundraising target size. DealStreetAsia, however, understands that the fund size could be in the range of its China-dedicated IDC vehicle, at around $1.3 billion.
The move comes less than three months after Gaw Capital announced the final closing of the IDC platform at $1.3 billion to invest in projects in partnership with IDC developers and operators in China. The China-focused fund is financed by global institutional investors, the largest among which is a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA), a sovereign wealth fund owned by the emirate of Abu Dhabi.
Gaw Capital, which mainly invests in the global real estate market, has demonstrated a growing interest in real estate projects that host data centres as the pandemic has further accelerated the industry development, promoting the global IDC market size to reach an estimate of $59.3 billion in 2020.
According to market researcher Reportlinker, the market is expected to further expand to $143.4 billion by 2027, growing at a compound annual growth rate (GAGR) of 13.4 per cent over the period of 2020 to 2027.
Mainland China and Hong Kong led the Asia-Pacific market in terms of data centre development in 2019, shows a ResearchAndMarkets report from February. They were followed by India, Australia, Japan, and Singapore.
In Southeast Asia, Indonesia, Thailand, and Malaysia also made a sizeable contribution towards growth thanks to a greater trend of digital transformation and tech adoption.
Gaw Capital specialises in adding value to under-utilised real estate projects worldwide, including residential development, commercial offices, retail malls, serviced apartments, hotels, and logistics, through redesign and re-positioning.
Since its inception in 2005, the firm has raised six commingle funds targeting the Greater China and Asia-Pacific regions. It also manages value-add/opportunistic funds in Vietnam and the US, a Pan-Asia hospitality fund, a European Hospitality Fund, and provides services for separate account direct investments globally.
Gaw Capital’s latest flagship fund, Gateway Real Estate Fund VI — the firm’s largest vehicle to date — was closed at a hard-cap of $2.2 billion in December 2019.
In August 2020, the firm announced the completion of two funds at a combined $900 million. These include a fund that focuses on real estate opportunities across sectors and markets in Asia, and another fund that invests in education platforms in major Asian cities.
As of Q2 2020, Gaw Capital has raised equity of $15.6 billion since 2005 and commands assets of $26.7 billion under management.