The Asian Infrastructure Investment Bank (AIIB) has committed $150 million to invest in the development of data centres that mostly serve emerging Asia through the Keppel Data Centre Fund II (KDCF II), a closed-end private equity vehicle managed by Alpha Investment Partners Limited (Alpha).
This is AIIB’s first data centre project. Multilateral development banks have previously invested in digital infrastructure, but such investments are becoming more essential nowadays with the acceleration of 5G technology and other high-speed and supercomputing needs driven by the pandemic.
AIIB’s investment of $100 million through a parallel fund structure, and $50 million through co-investments, mark the final close of KDCF II, a development fund making strategic investments in the fast-growing data centre sector with a focus on Asia-Pacific.
Many low- and mid-income countries lack their own domestic data infrastructure, and the disparities in data centre penetration among countries with different income levels are wide. This reflects shortcomings in the investment climate, where major global investors have largely shunned investing in emerging and frontier economies. The hope is that this project will enhance capital mobilisation to develop data centres serving emerging Asian markets.
“The digitalisation megatrend is re-shaping global markets and business operations,” said AIIB director-general, banking department (Region 1), Dongik Lee. “This trend has been accelerated by the COVID-19 pandemic, further highlighting the importance of data centres which are essential components of the digital ecosystem and attractive investment targets, as identified by AIIB’s Digital Infrastructure Sector Strategy. Our partnership with KDC Fund II and Alpha will foster the development and enhancement of hard digital infrastructure to bridge the digital divide by mainly investing in colocation data centres that serve Emerging Asia.”
Alpha CEO Alvin Mah added that data centres form the foundation of the digital economy which underpins almost every aspect of modern life today.
“We are pleased to welcome AIIB as an investor and look forward to strengthening our partnership through the Keppel Data Centre Fund II, which is seizing opportunities arising from the burgeoning demand for quality data centres,” said Mah. “Working together with Keppel Data Centres, we are able to tap on the Keppel Group’s know-how in data centre operations excellence, sustainable technology and energy efficiency to develop better and greener data centres, which is an increasing imperative for data centre operators. This will allow us to set our portfolio above the others to offer a wider range of services to clients and more compelling returns to investors.”
The project is aligned with the Asian Infrastructure Investment Bank’s thematic priorities of connectivity and regional cooperation, green infrastructure and private capital mobilisation. It will also support Alpha in developing climate finance monitoring indicators, incorporating the joint MDB methodology for tracking climate finance and an Environmental and Social Management system at the fund level. This partnership benefits AIIB’s geographical diversification, given the diverse pipeline covering South-East Asia and East Asia, among other regions across Asia-Pacific.