Macquarie Asset Management Buying Seoul Data Centre From IGIS for $530M

Macquarie Asset Management has agreed to acquire the 40-megawatt Hanam Data Centre near Seoul for KRW 734 billion ($530 million), confirming June reports that the Aussie firm was in due diligence to buy the soon-to-be-completed facility from South Korea’s IGIS Asset Management.

The deal size comes to KRW 918 billion ($663 million) after factoring in transaction cost and additional capital required to complete the remaining mechanical, electrical and plumbing works at Hanam IDC, the Sydney-based fund manager said Tuesday in a release. The purchase is being made on behalf of the listed Macquarie Korea Infrastructure Fund.

Hanam IDC has a target IT load of 25.44MW and a gross floor area of 41,919 square metres (451,212 square feet) across 12 floors. LG CNS, a Korean tech services firm, has rented the entire space and committed to using 99 percent of the target IT load.

“With the growth of IT technologies such as generative AI and cloud services as well as the growing need to outsource IT services, the growing demand for data centres is a key driver of digital infrastructure,” said Jason Suh, head of Macquarie Korea Asset Management. “Leveraging global market trends and thematics such as digitalisation, MKIF continues to provide investment opportunities to investors and wants to contribute to the development of the future industry.”

Server Shed Nears Launch

Initiated in 2019 and completed in 2023, Hanam Data Center represents the first data center development project for IGIS Asset Management and IGIS Asia Investment Management, and the sale to Macquarie marks South Korea’s first trade of a stabilized hyperscale data center with existing tenants.

“The Hanam Data Center was developed through the first-ever launched Korea data center development fund by IGIS Asia,” said Steve Oh, chief executive of IGIS Asia Investment Management. “We have since successfully launched our second data center fund and intend to further expand our investments in Asia.”

The sale by a fund of IGIS Asset Management’s IGIS Asia Investment Management subsidiary was managed by JLL as exclusive advisor.

“This transaction is significant for the market and JLL, representing the successful development and sale of the first hyperscale data center in Korea,” said Keehoon Lee, head of capital markets for JLL Korea. “Despite the challenging environment with investor sentiment dampened by high interest rates, there is increasing interest from both domestic and international investors in data centers. Traditionally dominated by telecommunications companies, the market is now experiencing disruptive innovation and entering a new phase with the participation of global players.”

Situated in the Pungsan-dong neighbourhood of Seoul’s surrounding Gyeonggi province, Hanam IDC is a co-location data centre being built to Tier 3 standards, which require redundant and dual-powered servers, network links and other components.

Under the terms of the lease, LG CNS signed separate use agreements with domestic IT firms that have subleased selected space within Hanam IDC to install, maintain and operate servers at their own expense.

Hanam IDC is believed to be ready to start operation shortly, with IGIS Asset Management having been developing the project together with LG CNS and contractor Samsung C&T after the October 2021 groundbreaking.

The 2002-vintage MKIF trades on the Korea Exchange with a market capitalisation of KRW 5.4 trillion ($3.9 billion). The fund invests in companies that pursue infrastructure projects in Korea, mainly in the transport sector, and has recently expanded into city gas, energy and digital infrastructure, according to Macquarie Asset Management.

The Hanam IDC project was funded through IGIS’s first data centre fund, with the company having closed on a second digital infrastructure vehicle early last year with $151 million in committed equity.

AirTrunk Saga

Macquarie Asset Management oversees $611.7 billion in assets worldwide. The firm is currently managing a sale process for Australian data centre operator AirTrunk, which could end up valued at $9.8 billion.

A consortium led by Macquarie Infrastructure and Real Assets acquired an 88 percent stake in AirTrunk from Goldman Sachs, Sixth Street Partners and AirTrunk founder Robin Khuda in 2020.

Macquarie Asset Management announced in July that it would spin off its core and core-plus real estate activities into a German-based independent investment manager, Manova Partners, with €11.4 billion ($12.4 billion) in assets under management.

That news came one month after the company confirmed the final closing of an opportunistic real estate fund, with the vehicle having raised $1.9 billion in equity commitments to deploy under a global mandate focused predominantly on developed markets.