KKR to acquire 20% stake in Singtel’s regional data center business valued at $800m
Singtel, an Asian communications technology group, and KKR have reached a definitive agreement under which a fund managed by KKR will commit up to S$1.1 billion ($800 million) for a 20 percent stake in Singtel’s regional data center business. This investment puts the enterprise value of Singtel’s overall regional data center business at S$5.5 billion ($4.0 billion). KKR will have the option to increase its stake to 25 percent by 2027 at the pre-agreed valuation.
The collaboration is a first between Singtel and KKR. The proceeds from this transaction will be used to accelerate the expansion of the regional data center business across ASEAN markets, including Singapore, Indonesia and Thailand, while exploring markets like Malaysia and others.
Singtel’s regional data center business is part of the Digital InfraCo unit, which was formed in June 2023. Singtel has been growing this business anchored by its expertise in Singapore, where it is one of the largest operators. In addition to 62 megawatts (MW) of existing capacity in Singapore, Singtel is building a new 58MW DC Tuas in Singapore and has also partnered with Telkom and Medco Power in Indonesia and GULF and AIS in Thailand to develop data centers in Batam and Bangkok, respectively. The data center portfolio will deliver a total combined capacity of more than 155MW once the three new projects are operational in 2025, with room to scale up to more than 200MW.
Southeast Asia’s data center market is expected to grow by 17 percent over the next five years compared to 12 percent for the rest of the world, with $9 billion to $13 billion in investments projected to flow into the region. While data center capacity is poised to increase at a compound annual growth rate of 19 percent from 2021 to 2026, demand is expected to outpace supply driven by increased data consumption, enterprises transitioning to the cloud and the rapid rise of AI in the region. Malaysia, Indonesia and Thailand could see the biggest increase in capacity, with Johor, in particular, benefiting from spill-over demand from Singapore due to the island state’s supply constraints. The growing need to handle high-performance computing tasks such as generative AI will also spur a significant growth in GPU-powered data centers in the years to come.
KKR is making this investment as part of its Asia infrastructure strategy. This transaction marks KKR’s latest investment in Southeast Asia infrastructure and data center infrastructure globally. KKR’s infrastructure investments in Southeast Asia have included Pinnacle Towers, a digital infrastructure platform in Asia with a strong focus on the Philippines; First Gen, a leading provider of clean and renewable power in 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 center infrastructure sector have included CyrusOne, a global leader in the development and operation of sustainable, scalable, high-availability and flexible data center solutions; Global Technical Realty, a build-to-suit and roll-up acquisition data center platform in Europe; and CoolIT Systems, a leading provider of scalable liquid cooling solutions in Canada.
The transaction is expected to be completed by the fourth quarter of 2023, subject to regulatory approvals and customary closing conditions.
