HomeAsiaSingtel sells $807m stake in Southeast Asia data center unit to KKR

Singtel sells $807m stake in Southeast Asia data center unit to KKR

The largest telecommunications operator in Southeast Asia Singapore Telecommunications agreed to sell a 20% stake in its regional data center business to US private equity giant KKR for S$1.1 billion ($807 million).

The deal puts the enterprise value of the Singtel unit at S$5.5 billion, according to a joint statement on Monday. It marks KKR’s largest investment in Southeast Asian infrastructure and data center infrastructure globally. The New York-based investment firm will have the option to increase its stake to 25% by 2027.

Singtel said it will use the proceeds to fund the expansion of the regional data center business across Southeast Asia, including Singapore, Indonesia and Thailand, while venturing into new markets such as Malaysia. The two companies said the deal is expected to close in the fourth quarter.

“KKR’s investment crystallizes the latent value of our data center assets and we hope this will clarify value for our shareholders in the coming months,” Arthur Lang, Singtel’s chief financial officer, said in the statement. “With more than S$6 billion unlocked since we embarked on our strategic reset two years ago, we continue to focus on generating value for our shareholders.”

Southeast Asia has been a hotbed for infrastructure investments due to the region’s demand for private capital to develop and improve telecommunications, transportation, utilities and other infrastructure. Last year, KKR raised more than $4 billion for its latest Asia infrastructure fund, surpassing the $3.9 billion it raised for its inaugural Asia Pacific fund in 2021. Its investment portfolio in Southeast Asia includes Pinnacle Towers , a leading telecommunications tower company in the Philippines, and Aster Renewable Energy, a platform that operates solar, wind and energy storage projects in the region.

Singtel and KKR said in the statement that they estimated the Southeast Asian data center market will grow by 17% over the next five years, attracting between $9 billion and $13 billion in investments over the period.

Singtel serves more than 770 million mobile customers in 21 countries, including Singapore, Australia, India, Indonesia, Philippines, Thailand and Africa. The company has been looking to raise capital from divestitures to finance the launch of its 5G network. In September last year, Singtel sold 3.3% stake in Indian mobile operator Airtel to Bharti Telecom, his joint venture with billionaire Sunil Mittal’s Bharti Enterprises, for S$2.25 billion.

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