Written by Scott Murdock, Kane Wu, Yantortra Gui
SYDNEY/HONG KONG/SINGAPORE (Reuters) – Global private equity investors and asset managers are investing billions of dollars tied to data centers in Asia-Pacific as the artificial intelligence (AI) boom fuels demand for digital infrastructure. The company is preparing for M&A and investments worth US dollars.
Industry executives say the rapid pace of transactions in the world's most populous region comes as countries and companies seek to expand data capacity to meet surging demand for AI.
The Asia-Pacific region, including Japan, led deal activity in the global data center market this year, with total M&A totaling $840.47 million, more than half of the global total, according to LSEG data.
Data center transaction value in the region reached a record high of $3.45 billion in 2023, according to LSEG. This year, that number is expected to be exceeded, with at least some large deals in the works.
A number of financial sponsors, including global investment giant Blackstone, are considering acquiring AirTrunk, which owns 11 hyperscale data centers in Australia and the rest of the world, according to people close to the deal. That's what it means.
AirTrunk owners Macquarie Group and Public Sector Pension Investment Board of Canada (PSP) have valued the business, which could be Asia's biggest data center deal this year, at up to ¥150, according to people familiar with the matter. It is said that it is aiming to make 100 million Australian dollars ($9.8 billion).
Airtrunk, Blackstone, Macquarie and PSP declined to comment.
“The AI revolution is driving unprecedented demand for high-quality data center capacity,” said Galen Cronin, managing director at Cadence Advisory, which advised Australian data center operator NEXTDC on its $861 million capital raise in April. “There is a demand wall.”
“The need to build new capacity in Asia Pacific over the next three to five years is staggering.My prediction is that deal flow in the data center space will intensify in 2024. ”
Last week, Microsoft announced it would invest $2.2 billion in Malaysia over the next four years to expand its cloud and AI services across Asia.
Increased data center investment in Asia follows a similar trajectory to that seen in the US and Europe, with tech giants such as Amazon, Microsoft, Alphabet Inc, and Meta Platforms rapidly expanding their AI capabilities. .
Microsoft announced last Wednesday that it would open its first data center in Asia in Thailand, a day after announcing $1.7 billion worth of investments in AI and cloud facilities in neighboring Indonesia.
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Other potential deals in Asia include Indonesia's state-owned Telkom Indonesia selling a stake in its data center business worth $1 billion and Japan's NEC selling data centers worth $500 million, according to reports. It will be done.
Ahmad Reza, Telkom's senior vice president of investor affairs, told Reuters on Wednesday that Telkom is open to a strategic partnership to bring new capabilities and new markets to its data center business unit NeutraDC.
“We have considered several potential partners and are still considering the best one,” he said. “This process is expected to be completed by the end of this year.”
NEC said it could not comment on market speculation.
U.S. investment firm Bain Capital is seeking margin financing for data center operator Chingdata's international assets and investment in its China operations, according to people close to the company.
Bain, which took Chindata private from the Hong Kong stock exchange in a $3.16 billion deal last year, declined to comment.
Goldman Sachs Asset Management (GSAM), which invested in AirTrunk in 2017 and sold its stake to a Macquarie-led consortium three years later, has invested $1 billion in data center development in Asia over the past three years. I invested more than that.
Nikhil Reddy, head of Asia Pacific real estate at GSAM, said the company will actively invest in additional projects with a particular focus on Japan and South Korea.
“AI is creating a different type of need for data centers, beyond the historical demand for the cloud with an emphasis on low latency,” he said. That's the key.”
(1 dollar = 1.5103 Australian dollar)
(Reporting by Scott Murdoch in Sydney, Yantortra Gui in Singapore and Kane Wu in Hong Kong; Editing by Sumeet Chatterjee and Stephen Coates)