September 18, 2023 - Singtel, a prominent communications technology group in Asia, has disclosed that global investment firm KKR will acquire a 20 percent stake in Singtel’s regional data centre business for S$1.1 billion (approximately US$800 million). This strategic investment values Singtel’s overall regional data centre business at S$5.5 billion, showcasing its significant growth potential.
Under the terms of the agreement, KKR will also have the option to increase its stake to 25 percent by 2027 at a pre-agreed valuation, further solidifying their collaboration. The partnership aims to leverage KKR’s extensive experience and investments in data centres and critical telecommunication infrastructure on a global scale, in addition to providing the necessary capital.
The funds generated from this transaction will be earmarked to expedite the expansion of Singtel’s regional data centre business across ASEAN markets, including Singapore, Indonesia, and Thailand. The company is also exploring opportunities in markets like Malaysia and others.
Singtel’s regional data centre business operates within the Digital InfraCo unit, established in June 2023, and has been growing steadily, anchored by its expertise as one of the largest operators in Singapore. The existing data centre portfolio in Singapore, coupled with upcoming projects, is expected to deliver a combined capacity of over 155MW by 2025 and offers the flexibility to scale up to more than 200MW.
Bill Chang, CEO of Singtel’s Digital InfraCo, emphasized, “KKR’s investment underscores the quality of our data centre portfolio and confidence in our plans to scale the business by capitalizing on the digitalization and rapid AI adoption that is transforming this region.”
Arthur Lang, Group CFO at Singtel, stated, “The investment by KKR crystallizes the latent value of our data centre assets. With more than S$6 billion being unlocked since we embarked on our strategic reset two years ago, we continue to focus on unlocking value for our shareholders.”
David Luboff, Partner and Head of Asia Pacific Infrastructure at KKR, highlighted, “We provide this tailored solution to support the regional data centre platform of Singtel, one of the most longstanding and distinguished corporations in Singapore and a leading digital infrastructure provider in Asia Pacific.”
The Southeast Asia data centre market is projected to witness a 17 percent growth over the next five years, surpassing the global average of 12 percent, with investments estimated to range from US$9 billion to US$13 billion. The demand for data centre capacity is expected to outstrip supply due to increased data consumption, enterprises transitioning to the cloud, and the rapid rise of AI in the region. Malaysia, Indonesia, and Thailand are anticipated to experience a substantial increase in capacity.
KKR’s investment aligns with its broader Asia infrastructure strategy and marks its latest venture into Southeast Asia infrastructure and data centre investments. Past infrastructure investments in the region by KKR include Pinnacle Towers, First Gen, and Aster Renewable Energy, focusing on digital infrastructure and renewable energy.
On a global scale, KKR has displayed a strong presence in the data centre infrastructure sector through investments in prominent companies like CyrusOne, Global Technical Realty, and CoolIT Systems. These investments highlight KKR’s commitment to shaping the future of data centre solutions worldwide.
