A fund managed by KKR has agreed to commit up to S$1.1 billion to acquire a 20 percent stake in Singtel’s regional data centre business, with the US buyout giant’s investment valuing the platform at S$5.5 billion ($4 billion).
KKR will have the option to increase its stake to 25 percent by 2027 at the pre-agreed valuation, it said Sunday in a release. The regional data centre business is part of Singtel’s Digital InfraCo infrastructure arm, which the telecom unit of state-backed Temasek Holdings launched in June.
“We are pleased to 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,” said David Luboff, KKR’s head of Asia Pacific infrastructure.
A source familiar with the deal told Mingtiandi on Monday that Manhattan-based KKR will acquire its interest directly from Singtel and receive board seats in the regional data centre business, with the transaction helping to enlarge the platform in Singapore and Southeast Asia.
Proceeds to Propel Expansion
In addition to 62 megawatts of existing data centre capacity in Singapore, Singtel is building a 58MW facility in the city-state’s Tuas area and has also partnered with Telkom and Medco Power of Indonesia and Gulf Energy and AIS of Thailand on projects in Batam and Bangkok.
The data centre portfolio will deliver a combined capacity of over 155MW once the three new projects are operational in 2025, with room to scale up to more than 200MW, according to Singtel.
The proceeds from the KKR transaction, which is expected to close in the fourth quarter of 2023, will go towards accelerating the expansion of the regional data centre business in Singapore, Indonesia and Thailand while exploring other markets like Malaysia.
KKR’s digital infrastructure investments have included last year’s acquisition of North American data centre operator CyrusOne alongside private equity firm GIP, as well as the formation of Global Technical Realty, a build-to-suit and roll-up acquisition data centre platform in Europe.
“KKR is a highly credible partner in the data centre space and we look forward to our strategic partnership in scaling up the platform to become a meaningful growth engine for Singtel,” said Arthur Lang, the telecom group’s chief financial officer. “The investment by KKR crystallises the latent value of our data centre assets and we hope this illuminates value for our shareholders in the coming months.”
The fresh funding for Singtel’s data centre platform adds to a whir of APAC deal activity for KKR this year.
In March, the US firm teamed up with Hong Kong’s Gaw Capital Partners to buy the Hyatt Regency Tokyo from Odakyu Electric Railway for a reported JPY 57.1 billion ($410 million), giving KKR its first hotel asset in Japan.
In April, KKR announced a deal to buy the Namsan Green Building in central Seoul on behalf of managed funds including the company’s $1.7 billion Asia Real Estate Partners value-add and opportunistic vehicle.
Last month, KKR revealed that it would sell its controlling interest in Australian Venue Co, an operator of pubs, restaurants and event spaces across Australia and New Zealand, to Hong Kong-based private equity shop PAG for an undisclosed amount.