Hong Kong PE Gaw Capital mulls new fund to build data centre portfolio outside China

Kenneth Gaw, President and Managing Principal of Hong Kong-based real estate PE major Gaw Capital

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.

Growing market

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.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.