On Monday (September 18), Singapore Telecommunications (Singtel) announced that global investment firm KKR will acquire a 20 percent stake in Singtel’s regional data center business for S$1.1 billion ($806.87 million).
KKR is considered one of the region’s largest investors within the server and pipeline infrastructure needed to support web connectivity and develop next-generation artificial intelligence services. The demand for such services is growing rapidly, especially after the launch of OpenAI’s ChatGPT.
The deal brings the entire value of Singtel’s regional data center business to A$5.5 billion ($4.03 billion). The proceeds will likely be used to expand its data center business in various Southeast Asian markets, including Singapore, Indonesia and Thailand, Singtel and KKR said in a joint statement. KKR’s investment is an element of the infrastructure strategy in Asia.
The Southeast Asian data center market is predicted to grow by 17 percent over the subsequent five years, in comparison with global growth of around 12 percent. The joint statement shows that investments on this sector within the region will range from $9 to $13 billion.
The funds invested by KKR will likely be used to speed up the expansion of Singtel’s regional data center business in Southeast Asia, including Singapore, Indonesia and Thailand. The statement said it’s going to even be used to explore latest markets, including Malaysia.
KKR said it has made a bespoke investment and likewise has the choice to extend its stake to 25 percent by 2027 at a pre-approved valuation.
This transaction reflects KKR’s recent investments in infrastructure within the Southeast Asia region and data centers all over the world. It complements KKR’s existing investments within the region, including Pinnacle Towers and Aster Renewable Energy.
This is the primary transaction between Singtel and KKR and enables Singtel to leverage KKR’s expertise in investing in global strategic data centers and telecommunications infrastructure, along with KKR’s capital contribution.
By 2025, Singtel’s data center portfolio is predicted to grow to a complete capability of over 155 megawatts, with the potential to expand to over 200 megawatts from the present capability of 62 megawatts. The transaction is predicted to shut within the fourth quarter of 2023.
The private equity firm previously raised roughly $3.9 billion for its first Asia-Pacific infrastructure fund around 2021, which is able to represent considered one of the biggest capital raises within the region. The fund will put money into quite a lot of sectors, from renewable energy to communications infrastructure.
Digital activity has surged throughout the pandemic, although valuations of web firms have fallen because the impact of Covid has waned. The firm has previously invested in quite a lot of sectors, including Indian energy firms and Pinnacle Towers, a pacesetter in power generation and telecommunications operator within the Philadelphia area.
