Asia-Pacific Data Center Deals Run Hot

This article originally appeared in Light Reading.

Data centers have become a hot item in Asia this year, as investors and operators position themselves for the AI future. The latest on the sale block is reported to be Australian operator iseek, owned by UK-based Amber Infrastructure Group.

Amber is seeking around A$400 million (US$264 million) for the business, which operates five centers, AFR.com reported last week.

In the biggest deal so far, also in Australia, Airtrunk's major owners, Macquarie Group and Canada's Public Sector Pension Investment Board, are preparing a sale that values the business at up to A$15 billion ($9.9 billion), according to Reuters.

Chinese steel company Shagang, parent of another Australian firm, GlobalSwitch, is also seeking a buyer after losing out on government business due to the changed political environment. Listed Australian player Next DC, which has just raised A$1.3 billion to fund expansion, is competing against private equity firm EQT for the asset.

In other pending deals, Singtel and partner KKR are weighing a minority stake in Singapore-based STT GDC, which has operations in Southeast Asia, India, and Europe, while NTT is seeking to acquire a 49% stake in PLDT's Philippines data center business.

Related:Singapore to Free Up More Power for Data Center Expansions

The two parties say the sale, expected to be around $750 million, will complete in the second half of the year.

Limited stock of assets

Asia Pacific, including Japan, has dominated data center deal-making so far this year, with M&A totaling $840.47 million, more than half of the global total, according to LSEG data.

With transactions such as the AirTrunk and PLDT sales likely to complete, this year's total looks certain to pass last year's total value of $3.45 billion. Valuations are being driven by high investor enthusiasm and the limited number of assets.

As real estate research firm CBRE explained in a recent research report: “Investor demand for data centers is strong, with a wide range of buyers seeking stabilized assets. However, there remains a lack of stock for sale.”

But it said activity varied, with developing markets like Indonesia and Malaysia more focused on developing new facilities rather than deals.

That said, it’s Japan where we are seeing the biggest data center builds, with KDDI and SoftBank both announcing plans for new facilities on the site of an old Sharp LCD plant in Osaka.

KDDI last week said it would build Asia’s largest AI data center, equipped with Nvidia kit, in partnership with Sharp, Super Micro Computer, and AI firm Datasection. SoftBank said it had struck an MoU with Sharp for a portion of the site, where it plans to build a 440,000 sq.m AI data center, expected to open next year.

Related:New Markets Opening Up Amid US Data Center Boom – JLL