KKR to Acquire 20% Stake in Singtel’s Regional Asian Data Center Business

Singtel booth

In a strategic move, communications technology group Singtel has entered a definitive agreement with global investment heavyweight KKR. The deal sees a KKR-managed fund pledging up to S$1.1 billion (approximately US$800 million) for a substantial 20% stake in Singtel’s burgeoning regional data center venture. This investment benchmark sets Singtel’s overall regional data center business enterprise value at a staggering S$5.5 billion.

This is their first alliance, and it would give Singtel access to KKR’s extensive worldwide experience in the field of data centers and vital communications infrastructure, as well as a substantial cash boost. With the injection of new funding, Singtel would be able to expand its data center footprint faster across ASEAN countries, including its home country of Singapore, as well as Indonesia and Thailand. The ambition doesn’t stop there; Singtel also has its sights set on emerging markets such as Malaysia.

Established as part of the Digital InfraCo unit in June 2023, Singtel’s regional data center enterprise has seen robust growth. Its stronghold in Singapore, where it stands as one of the dominant operators, is supplemented by an existing 62MW capacity. Future projects in the pipeline include a new 58MW DC Tuas in Singapore and collaborations with powerhouses such as Telkom and Medco Power in Indonesia and GULF and AIS in Thailand. With these projects slated for operation by 2025, Singtel’s data center portfolio is poised to offer a combined capacity exceeding 155MW.

Bill Chang, CEO of Singtel’s Digital InfraCo, elaborated on the new alliance: “This significant investment from KKR echoes their belief in our vision and strategy for the regional data centre landscape. Combining our mutual strengths will only bolster our position in the industry. The digital transformation wave, heightened by AI integration across sectors, offers a ripe opportunity, and we aim to be at the forefront of this evolution.”

Arthur Lang, Group CFO at Singtel, highlighted the broader industry perspective, noting the rapid growth and potential of the data center industry. He stated, “With KKR, a proven leader in the sector, we’re gearing up for a significant upscale. This investment underscores the latent value of our assets and augments our ongoing strategic initiatives, with over S$6 billion already realized in the past two years.”

David Luboff, KKR’s Head of Asia Pacific Infrastructure, emphasized the importance of robust digital infrastructures for Southeast Asia’s digital evolution, declaring Singapore as the potential central hub for the region. “Partnering with a reputable brand like Singtel aligns perfectly with our vision.”

Multi-Billion Dollar Investment

Recent projections for Southeast Asia’s data center market anticipate a growth rate of 17% over the next half-decade, outpacing the global rate pegged at 12%. With investments ranging between US$9 billion to US$13 billion earmarked for the region, there’s a palpable buzz. Particularly, Malaysia, Indonesia, and Thailand are touted to witness a significant uptick in capacity.

This move by KKR would align seamlessly with its Asia infrastructure strategy. Their past engagements in Southeast Asia’s infrastructure and data centers would speak volumes of their commitment to the domain. Some notable mentions include their investments in Pinnacle Towers, First Gen, and Aster Renewable Energy. On a global scale, their partnerships encompass industry giants like CyrusOne, Global Technical Realty, and CoolIT Systems.

Both parties anticipate the deal’s closure by Q4 2023, contingent on the standard regulatory green lights and customary closing conditions.