KKR Acquires 20% Stake in SingTel’s Regional Data Centre Business for S$1.1 Billion
Singapore Telecommunications (SingTel) announced on Monday that global investment firm KKR will acquire a 20% stake in SingTel’s regional data centre business for S$1.1 billion (US$806.87 million).
The deal values SingTel’s regional data centre business at S$5.5 billion (US$4.03 billion) and the proceeds will be used to expand the data centre business across Southeast Asian markets, including Singapore, Indonesia and Thailand, SingTel and KKR said in a joint statement.
“Robust digital infrastructure…will play a crucial role in enabling Southeast Asia’s flourishing digital economy, and 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, in the statement.
The deal comes amid growing global investors’ demand for infrastructure assets across Southeast Asia, lured by the region’s growth prospects and the sector’s stable and long-term returns.
KKR is making the investment as part of its Asia infrastructure strategy. Southeast Asia’s data centre market is expected to grow by 17% over the next five years compared to 12% for the rest of the world, with US$9 billion to US$13 billion in investments projected for the region, according to the joint statement.
KKR’s investment will be used to accelerate the expansion of SingTel’s regional data centre business across Southeast Asia, including Singapore, Indonesia, and Thailand, and explore new markets including Malaysia, the statement said.
KKR, which said it is making the investment commitment via a tailored solution, has the option to increase its stake to 25% by 2027 at a pre-agreed valuation.
The deal also marks KKR’s latest investment in Southeast Asia infrastructure and data centre infrastructure globally, adding to its existing investments in the region that includes Pinnacle Towers and Aster Renewable Energy.
The transaction is the first between SingTel and KKR, and enables SingTel to tap into KKR’s expertise in investing in data centres and critical telecommunication infrastructure globally in addition to capital.
Singtel’s regional data centre business is part of the Digital InfraCo unit which was formed in June 2023. SingTel’s data centre portfolio is expected to grow to a total combined capacity of over 155 megawatt in 2025, with room to scale up to more than 200 megawatt, from 62 megawatt existing capacity.
The transaction is expected to be completed by the fourth quarter of 2023.
Analysis
The acquisition of a 20% stake in SingTel’s regional data centre business by KKR is a significant development for both companies and for the data centre market in Southeast Asia.
For SingTel, the deal provides a much-needed capital injection to support the expansion of its data centre business. SingTel is facing increasing competition from both regional and global players in the data centre market, and the investment from KKR will help it to maintain its market leadership position.
For KKR, the investment in SingTel’s data centre business is a strategic move to gain exposure to the growing data centre market in Southeast Asia. The region is home to a rapidly growing middle class and a booming digital economy, which is driving demand for data centre services.
The deal is also a positive development for the data centre market in Southeast Asia. It is a sign of the growing interest from global investors in the region’s data centre market. The investment from KKR will help to boost the development of new data centre facilities and services in Southeast Asia, which will benefit both businesses and consumers.
Overall, the acquisition of a 20% stake in SingTel’s regional data centre business by KKR is a positive development for both companies and for the data centre market in Southeast Asia.
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