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KKR's latest data center investment is focused on the Southeast Asia market
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Singapore has been flagged by analysts as a key growth market for data centers
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KKR also has data center investments in North America and Europe.
When we said private equity had a keen eye on data centers, we weren’t joking. KKR made its latest investment in the space, handing over $800 million (SGD 1.1 billion) to Singapore operator Singtel to acquire a 20% stake in its data center business. It has the option to scale its stake to 25% by 2027.
The operator currently has 62MW of regional data center capacity, with plans in place for three new projects in Singapore, Indonesia and Thailand which will raise its total capacity to 155MW by 2025.
KKR previously invested $1 billion to form a data center infrastructure company called Global Technical Realty that is focused on serving the European market. It also shelled out $15 billion to acquire data center provider CyrusOne. A data center in Japan appears to be CyrusOne’s only asset in the Asia region. KKR’s investment also include data center liquid cooling vendor CoolIT Systems.
The firm’s latest move comes amid increased interest among data center operators in the Southeast Asia market. AWS has had a data center region in Singapore since 2010 and is planning new regions in Malaysia and Thailand. Microsoft has data centers in Hong Kong and Singapore, with locations in Indonesia and Malaysia listed as “coming soon.”
According to market research firm Technavio, Singapore in particular is expected to “record high growth in colocation centers” during the 2021-2025 forecast period. Indeed, about 35% of the region’s overall market growth during this timeframe is expected to come from Singapore. This is despite an increased focus on nearby countries like Vietnam and Indonesia and challenges associated with land availability and permitting.
“Singapore is an early adopter of emerging technologies. It is known for its ease of business execution and proximity and connectivity to other APAC countries and the U.S.,” Technavio wrote. “These factors have made the country one of the global hubs for IT, finance, shipping and other sectors.”
David Luboff, Partner and Head of Asia Pacific Infrastructure at KKR, echoed these sentiments in a statement.
“Robust digital infrastructure, including high-quality data centers, 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,” he said. “We look forward to working closely with Bill, Arthur and Singtel’s talented team to meet this tremendous demand and sharing our global expertise and network to accelerate the platform’s growth across the region.”