Keppel Capital, the asset management arm of Singapore-based conglomerate Keppel Corporation, today announced that it has closed its Keppel Data Centre Fund II (KDC Fund II), with $1.1bn USD in equity capital commitments, including co-investment capital. Alongside a $150m USD commitment from the Asian Infrastructure Investment Bank (AIIB), this $1.1bn USD capital raise exceeds Keppel Capital’s original target of $1.0bn USD.
Keppel Data Centre Fund II (KDC Fund II) – Overview
Keppel Data Centre Fund II (KDC Fund II) is a closed-end private equity vehicle managed by Alpha Investment Partners Limited, a private fund manager and wholly-owned subsidiary of Keppel Capital. Additionally, KDC Fund II will leverage Keppel Data Centres Holdings’ experience in developing and operating data centers.
For parent company Keppel Corporation, the third-party capital managed through KDC Fund II will allow the broader business to further expand its data center footprint, without relying solely on Keppel Corporation’s balance sheet to make investments.
Timeline
Keppel Capital launched fundraising for Keppel Data Centre Fund II (KDC Fund II) in December 2020, achieving a first close of $500m+ USD in capital commitments. Indeed, this implies a total fundraising timeline of just over 13 months, to its final close in mid-January 2022.
Fund Commitments
KDC Fund II received commitments from a group of investors from Asia and Europe, including sovereign wealth funds, financial institutions, insurance funds, and pension funds.
Asian Infrastructure Investment Bank (AIIB)
Keppel Capital gained a notable $150m USD total commitment to KDC Fund II from the Asian Infrastructure Investment Bank (AIIB). Specifically, AIIB’s $150m USD commitment comprises:
- $100m USD Limited Partner (LP) investment into KDC Fund II through a parallel fund structure
- $50m USD through co-investments
Notably, AIIB’s commitment to Keppel’s fund is the firm’s first project in the data center sub-sector of digital infrastructure.
Strategy
KDC Fund II will make investments in greenfield and brownfield data center assets across Asia-Pacific and Europe. While the fund’s focus will be “mainly investing in colocation data centers that mostly serve Emerging Asia”.
As a reference point, prior “Emerging Asia” fund investments made by the Asian Infrastructure Investment Bank (AIIB) have included key target countries of China, India, Indonesia, the Philippines, Bangladesh, Cambodia, Myanmar, Sri Lanka, and Vietnam.
To-date, Keppel Data Centre Fund II has already acquired a site to develop a greenfield data center in Shanghai, China. This data center is expected to be ready for service in 2022.
Prior Investment Fund
Keppel Capital’s first data center fund, Alpha Data Centre Fund (ADCF), was launched in 2016. Presently, this $1.0bn USD fund’s portfolio spans 1.4m+ sqft of gross floor area (GFA) across the markets of Singapore, Malaysia, Indonesia, Germany, Australia, and China.
Leadership
KDC Fund II’s investment manager, Alpha Investment Partners, is led by Alvin Mah as CEO. Mah has been part of Alpha Investment Partners for over 16 years.
Singapore-Based Investors – Data Center Demand
Over the past 12 months, Singapore-based institutional investors have shown a voracious appetite to invest in data centers – both domestically and internationally. Below are notable examples of recent demand:
- Digital Core REIT: Digital Realty’s IPO of a new $977m USD Singapore REIT. Specifically, the portfolio comprises 10 income-producing data centers located in the United States and Canada
- Keppel DC REIT: acquisitions in the United Kingdom, the Netherlands, and China
- Mapletree Industrial Trust: $1.3bn USD acquisition of 29 data centers from Sila Realty Trust. Also, a $208m USD purchase of a Richmond, Virginia data center
- Ascendas Reit: $672m USD acquisition of a portfolio of 11 data centers across Europe from Digital Realty
