KKR invests £645m in Singtel data centre business

Global investment firm KKR is set to acquire a 20% stake in Singtel’s regional data centre business with a £645 million ($800 million) investment.

The investment puts the enterprise value of Singtel’s overall regional data centre business at £3.2 billion ($4.03 billion).

“We look forward to our strategic partnership in scaling up the platform to become a meaningful growth engine for Singtel,” said Arthur Lang, Group CFO at Singtel.

This marks the inaugural collaboration between Singaporean telecommunications conglomerate Singtel and KKR. The partnership will allow Singtel to leverage KKR’s experience in global data centre and telecommunication infrastructure investments in addition to accessing capital.

“KKR’s investment underscores [our] confidence in our plans to scale the business by capitalising on the digitalisation and rapid AI adoption that is transforming this region,” said Bill Chang, CEO of Singtel’s Digital InfraCo.

The £645 million investment will accelerate Singtel’s regional data centre expansion in ASEAN markets, including Singapore, Indonesia, and Thailand. The Malaysian market will also be explored as a new market.

The investment from KKR in the Singtel data centre business is part of their broader strategy focused on infrastructure and data centre projects in Asia. KKR will have the option to increase its stake in Singtel to 25% by 2027 at the pre-agreed valuation.

Singtel Data Centre Capacity to Reach 155MW by 2025

Singtel’s data centre portfolio is expected to a total combined capacity of more than 155MW by 2025 once three new projects are operational. There is potential for further scaling to over 200MW.

In addition to 62MW of existing capacity, Singtel is building a new 58MW data centre known as DC Tuas in Singapore. Singtel has also partnered Telkom and Medco Power in Indonesia and GULF and AIS in Thailand to develop data centres in Batam and Bangkok respectively.

Singtel’s regional data centre business is part of its Digital InfraCo unit, established in June 2023.

KKR’s Investment Strategy

KKR has made several investments in various infrastructure sectors. In the Philippines, KKR has invested in digital infrastructure (Pinnacle Towers) and renewable power (First Gen). Meanwhile, in the Southeast Asia region, KKR has invested in renewable energy projects through Singapore-based Aster Renewable Energy

Globally, KKR has invested in the data centre infrastructure sector, with holdings in companies like CyrusOne, Global Technical Realty, and CoolIT Systems.

These companies are involved in various aspects of data centre development, operation, and cooling solutions.

Southeast Asia Data Centre Market Set For Significant Growth

Robust growth is expected in Southeast Asia’s data centre market. The market is projected to grow at a rate of 17% over the next five years. This growth rate is higher compared to the expected growth rate of 12% for the rest of the world.

While data centre capacity is poised to increase at a CAGR of 19% from 2021 to 2026. Malaysia, Indonesia, and Thailand could see the biggest increase in capacity. Johor in Malaysia could particularly benefit from spill-over demand from Singapore due to the island state’s supply constraints.

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.

“Robust digital infrastructure, including high-quality data centres, will play a crucial role in enabling Southeast Asia’s flourishing digital economy. Singapore is well-placed to serve as a central hub for the region,” said David Luboff, Partner and Head of Asia Pacific Infrastructure at KKR.

Investments in the Southeast Asia’s data centre industry are estimated to range from £7.2 billion ($9 billion) to £10.5 billion ($13 billion). This influx of capital is expected to support the expansion and development of data centre infrastructure.

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