May 09, 2024
Private equity investors and asset managers are preparing for an increase in mergers and acquisitions (M&A) and investments in Asia Pacific's data centre industry, driven by increased demand for digital infrastructure as a result of the AI boom.
The emerging trend is most obvious in the Asia Pacific, where data centre sales reached a record high of $840.47 million last year alone. Moreover, the fast growth of AI capabilities by technological behemoths such as Microsoft, Amazon, Alphabet Inc, and Meta Platforms is a big driver of the region's growing need for data centre capacity.
Microsoft, for example, has announced a $2.2 billion investment in Malaysia to strengthen its cloud and AI services in Asia, with plans to open its first Asian data centre in Thailand.
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Several large transactions are in the works, including a potential $1 billion sale of a share in Telkom Indonesia's data centre business and a $500 million data centre sale by Japan's NEC.
In addition, Bain Capital is looking for financing for Chindata's worldwide assets and China operations, while Goldman Sachs Asset Management has spent over $1 billion in Asian data centre expansion over the last three years.
Why should it matter?
The increase in data centre investments demonstrates the enormous need for high-quality data centre capacity caused by the AI revolution.
AI applications use large amounts of data, the demand for expanded capacity becomes critical, indicating a positive prognosis for the Asia Pacific data centre industry in the future years. With steady investments and strategic alliances on the horizon, industry analysts predict increased transaction flow in the data centre area through 2024 and beyond.
