KKR to acquire stakes in Singtel’s regional data centre business

Author: Isha Jain

Singtel and KKR have reached a definitive agreement, under which a fund managed by KKR will commit up to S$1.1bn for a 20% stake in Singtel’s regional data centre business.

This investment puts the enterprise value of Singtel’s overall regional data centre business at S$5.5bn. KKR will have the option to increase its stake to 25% by 2027 at the pre-agreed valuation. The collaboration is a first between Singtel and KKR, and enables Singtel to tap on KKR’s expertise investing in data centres and critical telecommunication infrastructure globally in addition to capital.

The proceeds from this transaction will be used to accelerate the expansion of the regional data centre business across ASEAN markets, including Singapore, Indonesia and Thailand, while exploring markets like Malaysia and others. This will widen the business’ strategic choices, giving a variety of options to monetise in the future.

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$9bn to US$13bn in investments projected to flow into the region. While data centre capacity is poised to increase at a compound annual growth rate of 19% from 2021 to 2026, demand is expected to outpace supply driven by increased data consumption, enterprises transitioning to the cloud and the rapid rise of AI in the region.

Malaysia, Indonesia and Thailand could see the biggest increase in capacity with Johor, in particular, benefiting from spill-over demand from Singapore due to the island state’s supply constraints. The growing need to handle high performance computing tasks, such as generative AI, will also spur a significant growth in GPU-powered data centres in the years to come.

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