After finding fertile ground with its first data centre fund targeting investments in Asia Pacific and Europe, Singaporean conglomerate Keppel Corp has launched a second effort that just achieved a first closing in excess of $500 million.
Following up on the 2016-vintage Alpha Data Centre Fund, Keppel Data Centre Fund II has a target size of $1 billion, according to an announcement today by Keppel Capital, which will manage the closed-end vehicle under its Alpha Investment Partners private fund management division.
KDC Fund II will work in concert with Keppel Data Centres, a sister division of the Singapore conglomerate, to capture investment opportunities in greenfield and brownfield assets, tapping the latter’s expertise in developing, operating and maintaining data centres, the company said.
Seizing Digital Opportunities
“The COVID-19 pandemic has accelerated the pace of digitalisation for many businesses and governments alike and further spurred the growth of the data centre sector,” said Alvin Mah, CEO of Alpha Investment Partners. “Riding on this growth, Keppel Data Centre Fund II will continue to leverage the Keppel Group’s expertise and network to seize opportunities in this burgeoning sector and connect our investors with quality investments.”
The group has yet to publish details regarding the investors who have contributed to the fund achieving its first closing, nor has it provided a timeline for the final closing of the initiative. Alpha Data Centre Fund had received backing from CPPIB and Keppel Data Centres, in addition to contributions directly by Alpha Investment Partners.
Keppel’s enthusiasm for data centres aligns with the group’s goals of streamlining operations and focusing on key sectors like energy, urban development, connectivity and asset management under its Vision 2030 initiative.
To further those aims, Keppel last month announced a leadership reshuffle in which it appointed tech-savvy MIT grad Louis Lim as CEO of development flagship Keppel Land and promoted 20-year real estate veteran Anthea Lee to head Keppel’s data centre REIT.
The change in leadership came just three months after state-owned Temasek Holdings, Keppel’s largest shareholder, abandoned a $3 billion buyout offer for the conglomerate after disappointing financial results for the first half of the year.
Building on Success
Alpha Data Centre Fund, which is also managed by Alpha Investment Partners, today has a portfolio spanning over 1.38 million square feet (128,206 square metres) of gross floor area from investments in Singapore, Malaysia, Indonesia, Germany, Australia and China.
The fund got a boost in late 2017 with a $350 million capital commitment from the Canada Pension Plan Investment Board, bringing the total amount raised to $1 billion — double the fund’s original target of $500 million.
More recently, Keppel in July said the fund would invest RMB 1.5 billion ($213.7 million) to develop a greenfield data centre in Guangdong province, marking the group’s first foray into mainland China’s data centre industry.
In Wednesday’s announcement, Keppel Data Centres CEO Wong Wai Meng said his team was collaborating with industry leaders to explore how the carbon footprint of data centres could be reduced, including through the development of floating data centre parks and hydrogen infrastructure for power generation.
The Asia Pacific data centre market is expected to overtake North America to become the largest in the world next year, according to a Cushman and Wakefield analysis released in 2019.
Underpinned by a surge in demand for cloud services and digitisation, the total market size for Asia Pacific is predicted to be $28 billion by 2024 — 20 percent more than the $23.4 billion forecast for North America, the consultancy said.
In addition to their mainland China project this year, Alpha Data Centre Fund last year acquired a site in Sydney, Australia for a 57,000 square foot (5,300 square metre) facility. In 2018 the fund had teamed up with Keppel Data Centres to build a bit barn in the Malaysian state of Johor, in addition to setting up a joint venture that year with Indonesia’s Salim Group for a server facility outside of Jakarta.
The fund also invested in projects in Singapore and Germany.