KKR to acquire 20% stake in Singtel’s regional data center unit

KKR will have the option to increase its stake to 25% by 2027

In a new agreement, a fund managed by KKR is purchasing a 20% stake in Singtel’s regional data center business worth up to S$1.1 billion ($807 million). The deal is part of KKR’s Asia infrastructure strategy, and according to the companies, the proceeds will be used to accelerate the expansion of the regional data center business across Singapore, Indonesia and Thailand, as well as expand into new Asian markets such as Malaysia and others.

The pair also claimed in a press release that Southeast Asia’s data center market is anticipated to grow by 17% over the next five years, compared to 12% for the rest of the world. “While data centre capacity is poised to increase at a compound annual growth rate of 19% 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,” they stated, adding that advanced computing applications like  generative AI will also lead to a significant growth in GPU-powered data centers over the next few years.

“KKR’s investment underscores the quality of our data centre portfolio and confidence in our plans to scale the business by capitalising on the digitalisation and rapid AI adoption that is transforming this region,” commented Bill Chang, CEO of Singtel’s Digital InfraCo. “Our expertise in designing, building and operating data centres, and our connectivity leadership in the region, together with KKR’s strong track record in supporting digital infrastructure assets and its platform-building expertise makes for a powerful combination.”

Singtel’s regional data center business is part of the Digital InfraCo unit, which was formed in June 2023, and also incorporates the company’s subsea cable and satellite carrier businesses, its integrated MEC and cloud orchestration platform. Currently, is partnering with Telkom and Medco Power in Indonesia and GULF and AIS in Thailand to develop data centers in Batam and Bangkok

KKR will have the option to increase its stake to 25% by 2027. The transaction is expected to be completed by the fourth quarter of 2023 and is subject to regulatory approval.

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