KKR buys 20% stake in SingTel’s data centre business for $807 million

KKR buys 20% stake in SingTel’s data centre business for $807 million

Singapore Telecommunications (SingTel), the largest telecom operator in Southeast Asia, has announced that it has sold a 20% stake in its regional data centre business to global investment firm KKR for S$1.1 billion ($806.87 million).

The deal values SingTel’s data centre business, which operates in Singapore, Indonesia, and Thailand, at S$5.5 billion ($4.03 billion). SingTel said it will use the proceeds to expand its data centre footprint across Southeast Asia and explore new markets such as Malaysia.

KKR, which has been investing in infrastructure and data centre assets in the region, said it sees strong growth potential in Southeast Asia’s digital economy and Singapore’s role as a regional hub.

“Robust digital infrastructure…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,” said David Luboff, partner and head of Asia-Pacific infrastructure at KKR, in a joint statement with SingTel.

According to the statement, 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 $9 billion to $13 billion in investments projected for the region.

KKR said it will support SingTel’s data centre business, which is part of its newly formed Digital InfraCo unit, to accelerate its expansion and enhance its capabilities. KKR also has the option to increase its stake to 25% by 2027 at a pre-agreed valuation.

The transaction, which is expected to be completed by the fourth quarter of 2023, marks the first collaboration between SingTel and KKR. SingTel said it will benefit from KKR’s expertise and network in investing in data centres and critical telecommunication infrastructure globally.

The deal also adds to KKR’s portfolio of infrastructure and data centre investments in Southeast Asia, which includes Pinnacle Towers and Aster Renewable Energy.

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