DigitalBridge Group (NYSE: DBRG), through its flagship private equity fund called DigitalBridge Partners II (DBP II), today announced the acquisition of an eventual 70% ownership stake in AIMS Group from TIME dotCom Berhad (KLSE: TIMECOM) and the formation of an edge data center platform focused on the Southeast Asia region.
As part of the transaction, AIMS is being valued at $700 million USD (3.2 billion Malaysian Ringgit) on a 100% enterprise value basis. Based on the overall AIMS business (AIMS HoldCo and AIMS Thailand), this transaction represents a multiple of 37.3x EV / FY21 EBITDA.
In terms of proceeds, TIME dotCom expects to receive cash consideration of $437.6 million USD (2.0 billion Malaysian Ringgit), which is subject to net debt, working capital, and other closing adjustments. Finally, the transaction is expected to close by the end of Q2 2023.
AIMS Group – TIME dotCom’s Data Centers
AIMS Group, a wholly-owned subsidiary of TIME dotCom, is a carrier-neutral data center operator and managed services provider based in Malaysia. The company’s facilities provide interconnected environments to a diverse customer base, comprising domestic and international telecommunications carriers, enterprises, hyperscalers, and content delivery networks (CDNs).
AIMS currently operates data centers with over 63 megawatts of potential power capacity at three locations: a flagship facility in downtown Kuala Lumpur (Malaysia), a purpose-built campus in Cyberjaya (Malaysia), and a new facility in downtown Bangkok (Thailand). Additionally, the company has three points-of-presence (PoPs) “coming soon” in Vietnam, specifically, in the locations of Ho Chi Minh City, Hanoi, and Tan Thuan.
Notably, AIMS’ data center in Kuala Lumpur is the anchor site for the Malaysia Internet Exchange (MyIX), which handles traffic for over 88 peers and networks with international connectivity for customers. Given this connectivity, AIMS is widely regarded as the home of the Malaysian internet.
AIMS has a robust development pipeline, as well as considerable expansion capacity at its existing data centers.
Both DigitalBridge and TIME dotCom envisage a rapid expansion of AIMS’ data center facilities across primary and secondary cities in Southeast Asia and beyond with a focus on providing services to multinational corporations, large enterprises, content providers, internet infrastructure providers, and financial institutions. Furthermore, the plans contemplate making Malaysia a core hub and gateway for greater connectivity in the Southeast Asia region.
As shown below, data center demand across Southeast Asia is expected to remain strong, driven by:
- Cloud adoption – both public and private
- Edge nodes moving closer to the end user
- Continued growth in data exchange and consumption
Upon completion of the transaction, AIMS will retain its headquarters in Kuala Lumpur, Malaysia and continue to be run by its current management team.
AIMS Group’s reported financial results for FY2021 (December 31, 2021) in Malaysian Ringgit and U.S. dollars are shown below:
|AIMS Group||FY2021 (Malaysian Ringgit)||FY2021 (USD)|
|Revenue||RM182 million||~$43.6 million|
|EBITDA||RM86 million||~$20.6 million|
|Profit After Tax||RM38 million||~$9.1 million|
Transaction Overview – DigitalBridge Buys Stake in AIMS Group
In terms of partnership structure, DigitalBridge is acquiring stakes in AIMS HoldCo (Malaysia and Singapore) and AIMS Thailand.
DigitalBridge and TIME dotCom’s partnership involves the purchase by DigitalBridge of:
- AIMS HoldCo: 49% of the ordinary shares and 100% of the irredeemable convertible preference shares (ICPS) in AIMS Data Centre Holding Sdn Bhd; and
- AIMS Thailand: 21% of the ordinary shares in AIMS Data Centre (Thailand) Limited from Symphony Communications
Importantly, the irredeemable convertible preference shares (ICPS) are convertible into ordinary shares of AIMS HoldCo within 2 years, which would increase DigitalBridge’s stake in AIMS HoldCo from 49% to 70%. At this point, TIME dotCom would hold the remaining 30% of AIMS HoldCo.
AIMS is being valued by DigitalBridge at $700 million USD (3.2 billion Malaysian Ringgit) on a 100% enterprise value basis. Therefore, based on the overall AIMS business (AIMS HoldCo and AIMS Thailand), this transaction represents a multiple of 37.3x EV / FY21 EBITDA. A further decomposition of the valuation by each entity is shown below:
Isolating solely AIMS HoldCo, which represents over 98% of the transaction value, DigitalBridge is valuing the business at $688.4 million USD (3.15 billion Malaysian Ringgit) on a 100% enterprise value basis, which equates to a multiple of 35.8x EV / FY21 EBITDA.
DigitalBridge is acquiring its stake in data center operator AIMS Group via DB Arrow Pte. Limited (DBAPL), a Singapore private company limited by shares. DBAPL is a wholly-owned subsidiary of DB Arrow Holdco Pte. Limited (DBAHPL), which is a Singapore private limited company. Ultimately, DBAHPL is controlled by funds managed by affiliates of DigitalBridge (NYSE: DBRG).
TIME dotCom – Transaction Rationale
TIME dotCom is a telecommunications provider that delivers domestic and global connectivity, data center, cloud computing, and managed services to customers across Southeast Asia.
Following a strategic review of its data center business in late-2021, TIME dotCom found that there were significant opportunities in underserved markets across Asia. Aggressively pursuing these opportunities would require:
- Access to significant capital for investments
- Deep understanding of global trends in the data center sector
- Expertise in building and scaling data center businesses
Ultimately, TIME dotCom decided that its ambition would be best realized with a strategic investment partner to help expand the AIMS data center business across Asia. Subsequent to a thorough marketing process, involving final round bidder Equinix (NASDAQ: EQIX), TIME dotCom decided to partner with DigitalBridge.
TIME dotCom realized a significant step-up in the valuation of AIMS Group as part of the $700 million USD (3.2 billion Malaysian Ringgit) transaction with DigitalBridge. Presently, AIMS’ book value stands at only 240 million Malaysian Ringgit, while the deal also represents a significant gain since TIME dotCom first acquired AIMS in 2012 for only 119 million Malaysian Ringgit.
As a result, TIME dotCom is able to crystallize substantial value from the investments that it has made in the AIMS data center platform over the years.
Use of Proceeds
TIME dotCom will use the proceeds from the transaction of $437.6 million USD (2.0 billion Malaysian Ringgit) to pay a special dividend of up to $218.8 million USD (1.0 billion Malaysian Ringgit) to shareholders, while the balance will be re-invested into the TIME dotCom business to further grow shareholder value.
DigitalBridge – Edge Data Centers
DigitalBridge is an active investor in the digital infrastructure sub-sector of edge data centers and with AIMS, the firm now has a platform for the Southeast Asia region. Within this category, DigitalBridge also has exposure to edge data center operators including AtlasEdge Data Centres, DataBank, EdgePresence, and Leading Edge Data Centres:
- AtlasEdge Data Centres: portfolio comprises 130+ carrier-neutral colocation facilities across 11 European countries. Particularly, these countries are Belgium, Denmark, France, Germany, Ireland, Italy, the Netherlands, Poland, Spain, Switzerland, and the United Kingdom
- DataBank: portfolio comprises 65+ facilities, in 27+ markets, across 2.0 million sqft of raised floor space, primarily in the United States. Additionally, DataBank owns an interest in EdgePresence which operates modular, purpose-built edge data centers in multiple U.S. markets
- Leading Edge Data Centres: operates Tier III (N+1) colocation facilities across greater metropolitan and regional locations within Australia. Presently, Leading Edge Data Centres has four operational and fully networked data centers in Newcastle, Tamworth, Dubbo, and Albury – all in New South Wales (NSW)
READ MORE: What is an Edge Data Center? (With Examples)