U.S. private equity giant KKR has agreed to buy Singapore Telecommunications’ 20% stake in its regional data center business for S$1.1 billion ($807 million).
According to a joint statement released on Monday, Singtel’s enterprise value is estimated at S$5.5 billion. The New York-headquartered investment firm will have the option to increase its stake to 25% by 2027. It is KKR’s largest investment in Southeast Asian infrastructure and data center infrastructure globally.
In addition to expanding into new markets like Malaysia, Singtel plans to use the proceeds to expand its regional data center business across Southeast Asia, including Singapore, Indonesia and Thailand. In a joint statement, the companies said the deal would close by the fourth quarter.
In the statement, Arthur Lang, CFO of Singtel, said, “KKR’s investment clarifies our data center assets’ latent value and we hope it will reveal value to shareholders soon.” As we continue to unlock value for our shareholders, we have unlocked more than S$6 billion since we embarked on our strategic reset two years ago.
Southeast Asia has seen a surge in infrastructure investment as the region requires private capital to enhance its telecommunications, transportation, utilities and other infrastructure. In 2021, KKR successfully secured over $4 billion for its newest Asia infrastructure fund, surpassing the $3.9 billion raised for its first Asia Pacific fund. KKR $807 million investment in stake endeavors in Southeast Asia include Pinnacle Towers, a prominent telecommunications tower enterprise in the Philippines, and Aster Renewable Energy, a platform that manages solar, wind and energy storage projects throughout the region.
KKR and Singtel estimate that the Southeast Asian data center market will grow by 17% over the next five years, attracting $9 billion to $13 billion in investments.
More than 770 million mobile customers are served by Singtel in 21 countries, including Singapore, Australia, India, Indonesia, the Philippines, Thailand and Africa. In order to fund the launch of its 5G network, the company has been seeking capital from divestments. For S$2.25 billion, Singtel sold a 3.3% stake in Airtel to Bharti Telecom, a joint venture with Sunil Mittal’s Bharti Enterprises.
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