Global buyout powerhouse KKR & Co announced that it has agreed to commit up to S$1.1 billion ($807 million) for a 20% stake in the regional data centre business of Singaporean telecom conglomerate Singtel.
The investment values Singtel’s overall regional data centre business at about $4 billion. KKR has the option to raise its stake to 25% by 2027 at the pre-agreed valuation, per the announcement.
The regional data centre business is part of Singtel’s Digital InfraCo unit, which was formed in June 2023. Singtel said the investment from KKR will be utilised to accelerate the expansion of the business across ASEAN markets, including Singapore, Indonesia, and Thailand.
Singtel is one of Singapore’s largest data centre operators, with an existing capacity of 62 MW. It is also building a new 58MW DC Tuas in Singapore and has partnered with Telkom and Medco Power in Indonesia and GULF and AIS in Thailand to develop data centres in Batam and Bangkok, respectively.
KKR is making this investment as part of its Asia infrastructure strategy. Last year, KKR raised nearly $6 billion for its second Asia Pacific infrastructure fund at the first close, making it the biggest-ever PE fundraising for the sector in the region, according to a Reuters report.
The transaction is expected to be completed by the fourth quarter of 2023, subject to regulatory approvals and customary closing conditions.
The deal marks KKR’s latest investment in Southeast Asia infrastructure and data centre infrastructure globally. Its infrastructure investments in Southeast Asia include Pinnacle Towers, a digital infrastructure platform in Asia with a strong focus on the Philippines; and Aster Renewable Energy, a renewables platform that develops, builds, and operates solar, wind, and energy storage projects in the region.
Worldwide, KKR’s investments in the data centre infrastructure sector have included CyrusOne, a global leader in the development and operation of sustainable, scalable, high-availability and flexible data centre solutions; Global Technical Realty, a build-to-suit and roll-up acquisition data centre platform in Europe; and CoolIT Systems, a leading provider of scalable liquid cooling solutions in Canada.
“Robust digital infrastructure, including high-quality data centres, will play a crucial role in enabling Southeast Asia’s flourishing digital economy, and Singapore is well-placed to serve as a central hub for the region. We look forward to working closely [Singtel] to meet this tremendous demand,” said David Luboff, partner and head of Asia Infrastructure at KKR.
Data cited by the buyout major showed that Southeast Asia’s data centre market is expected to grow by 17% over the next five years compared to 12% for the rest of the world, with $9 billion to $13 billion in investments projected to flow into the region.
