AI boom fuels demand for data center deals in Asia Pacific this year

By 2023, regional data center deals reached an all-time high of $3.45 billion, according to LSEG. That number is expected to be surpassed this year, with at least a couple of big deals underway.

Data centers are secure, temperature-controlled facilities that house high-capacity servers and data storage systems, with multiple power sources and high-bandwidth Internet connections. More companies are now using data centers to host or manage the IT infrastructure for their AI projects. Photo: Shutterstock
Several financial backers, including the global investment powerhouse black rockseek to acquire AirTrunkwhich owns 11 hyperscale data centers Australia and the rest of the region, sources close to the transaction said.
owners of AirTrunks, Macquarie Group and Canada’s Public Sector Pension Investment Board (PSP), are seeking to value the business at up to A$15 billion (US$9.8 billion), sources said, in what could be the data center transaction largest in Asia this year.

AirTrunk, Blackstone, Macquarie and PSP declined to comment.

The AI ‚Äč‚Äčrevolution is creating an unprecedented wall of demand for high-quality data center capacity, said Garren Cronin, managing director of Cadence Advisory, which advised on the Australian operator’s fundraising of the NEXTDC data center for $861 million in April.

Microsoft Chairman and CEO Satya Nadella speaks during the company’s Build: AI Day event in Kuala Lumpur, Malaysia on May 2, 2024. Photo: EPA-EFE

The new capacity that needs to be built in Asia and the Pacific in the next three to five years is simply mind-boggling. My expectation is that deal flow in the data center space will intensify in 2024.

Telkom Indonesia is open to strategic collaborations to introduce its data center business arm, NeutraDC, to new capabilities and new markets. Photo: SOPA Images/LightRocket via Getty Images
Other possible deals in Asia include state ownership Telkom Indonesiathe sale of a stake in its data center business worth $1 billion and Japans NEC weighing a $500 million data center sale, according to news reports.

Telkoms senior vice president of investor relations Ahmad Reza told Reuters on Wednesday that the company is open to strategic partnerships to introduce its data center business arm, NeutraDC, into new capabilities and into new markets.

We have explored several potential partners, but we are still evaluating the best one, Reza said. We hope to finish this process by the end of this year.

NEC said it could not comment on market speculation.

Several companies are looking to acquire AirTrunk, an Australian company that operates 11 such hyperscale data centers in Sydney. Photo: AirTrunk
US investment company Bain Capital is seeking credit financing for the data center operator’s international assets Chindata and investments for its China business, people close to Bain Capital said.
Bain, who took Chindata privately from Stock Exchange of Hong Kong last year in a US$3.16 billion deal, declined to comment.
Goldman Sachs Asset Management (GSAM), which invested in AirTrunk in 2017 before selling its stake to a Macquarie-led consortium three years later, has deployed more than $1 billion in data center developments in Asia over the past three years .

The firm would actively invest in additional projects, with a particular focus on Japan and South Korea, said Nikhil Reddy, head of Asia-Pacific real estate at GSAM.

AI creates a different kind of need for data centers beyond the historical demands of the cloud focused on low latency. Now with AI, which comes with massive data consumption, capacity is key, he said.

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