Warburg-backed Princeton Digital to acquire 70% stake in XL Axiata data centre portfolio

Data centre interior.

Singapore-based internet infrastructure company Princeton Digital Group (PDG) will acquire a 70 per cent stake in telecom firm XL Axiata’s data centre portfolio for an undisclosed figure, the companies said in a joint statement on Wednesday.

XL Axiata, which is Indonesia’s second-largest telecom firm, owns five data centres across the archipelago. The data centres will be run by a new joint venture, Princeton Digital Group Data Centres, after completion of the deal.

Warburg Pincus-backed PDG has also committed to investing $100 million in the JV, which will build a new hyperscale data centre and increase the capacity of existing centres.

“With further investments in the coming years, we see this JV becoming the undisputed market leader in Indonesia and one of the largest operators in South East Asia,” said PDG chief executive Rangu Salgame.

PDG, which has a presence in China, Singapore, India, and Indonesia, said in its statement that it sees a massive opportunity for its data centre business in Southeast Asia’s largest economy. According to Google Temasek study, Indonesia’s digital economy will reach $100 billion by 2025 from $27 billion in 2018.

According to research by London-based Technavio, the data centre market in Southeast Asia will grow steadily at a compound annual growth rate (CAGR) of around 14 per cent between 2017 and 2021. 

Indonesia has attracted similar investments in internet infrastructure from global and regional tech players such as Alibaba Cloud, tech giant Amazon’s subsidiary Amazon Web Services (AWS), and Google Cloud.

In April, AWS announced that it is currently constructing two data centres in Indonesia, with one of them scheduled to be completed in early 2022. The company entered Indonesia last year and established an office in Jakarta.

In January, Alibaba Cloud announced the launch of its second data centre in Indonesia, only 10 months after setting up its first data centre in the country.

Local player Graha Teknologi Nusantara, an affiliate of Indonesian conglomerate Lippo Group, operates a data centre in Cikarang industrial complex in West Java, primarily catering to Japanese companies and local startups.