Singapore Telecommunications has announced KKR, an American global investment company,  has agreed to pay $807m for 20% of its regional data centre business, SingTel.

The large deal marks a growth in demand from global investors for digital infrastructure assets in Southeast Asia and the world, as AI continues to soar.

The deal, which puts the enterprise value of the regional data centre business to $4.03bn, will be used to expand the data centre business across more markets, including Indonesia, Singapore and Thailand. 

David Luboff, partner and head of Asia-Pacific infrastructure at KKR, said in a joint statement from SingTel and KKR: “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.”

According to the joint statement, the data centre market is set to grow 17% over the next five years in Southeast Asia, compared to 12% across the rest of the world. A total of between $9bn and $13bn is expected to be invested into the region over that time period. 

KKR reportedly has the option to increase its stake in the data centre business to 35% by 2027 at a pre-agreed valuation, Reuters reported. 

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The US investment company has already invested in Pinnacle Towers and Aster Renewable Energy based in the region, as the company looks to build its portfolio of data centre infrastructure. 

SingTel’s data centre portfolio is expected to grow to a total of over 155 megawatt in 2025, from its existing 62 megawatt capacity, according to the statement.

What are data centres?

In short, they are huge groups of networked computer servers.

These connected computers can and usually do empower organisations to run applications, give them network capabilities to connect employees and resources, and provide storage capabilities to process data.

David Bicknell, principal analyst of thematic research at GlobalData, previously told Verdict: “They can scale from being small for an individual organisation to handling the data traffic for global conglomerates or Big Tech companies like Amazon, Microsoft, Google, Meta and Apple.

“The largest centres can be the size of multiple football fields and have thousands of servers running,” said Bicknell.

According to a GlobalData thematic report, data centres have become regarded as the fifth utility and “as critical as water, electricity, gas and telecoms, with their staff categorised as key workers.”