KKR and Singtel are taking full ownership of ST Telemedia Global Data Centres by spending $6.6 billion to buy an 82% stake they don’t already own, in a big bet to meet growing demand for data storage and processing capacity.
The latest transaction, first reported to be in the making since last November, gives STT GDC an implied enterprise value of $13.8 billion. This figure includes leverage and capital expenditure for committed projects.
Upon completion, KKR and Singtel will own stakes of 75% and 25% respectively in STT GDC, taking into account the conversion of existing redeemable preference shares that both KKR and Singtel now hold.
KKR and Singtel will pay the $6.6 billion in cash, over two equal tranches. To help fund the deal, they have secured $5 billion in debt facilities that will also be used for future capex.
Singtel, whose shares have gained over the last two days after news of this deal was out, will see a cash contribution $740 million.
For the FY ended Dec 2024, STT GDC incurred a net loss of $185 million and had book value and net tangible assets of $5.3 billion and $4.7 billion respectively.
See also: A-Sonic to take 55% stake in Malaysia's tech firm RES
Singtel says that its investment in STT GDC will be equity-accounted, which means it can "participate" in the enlarged portfolio’s value creation without consolidating STT GDC’s debt or financials.
"This will limit any impact on Singtel Group’s financials while retaining meaningful upside as STT GDC grows. This transaction is therefore, not expected to have an impact on Singtel's investment grade credit rating and dividend policy," says Singtel, who is now guiding a value realisation dividend guidance of between 3 to 6 cents per year, or up to $5 billion, plus a value realisation share buyback of up to $2 billion over three years.
STT GDC, an indirect unit of Temasek Holdings via ST Telemedia, owns a network of around 100 data centres across a dozen markets, with a total capacity of 2.3 GW. KKR and Singtel, already in a data centre JV of their own, jointly acquired a 18.3% stake for $1.75 billion in 2024. Nxera, as this venture is called, is poised to reach 200 MW over its four operating markets.
See also: Musk’s SpaceX combines with xAI at US$1.25 tril valuation
STT GDC and Nxera will continue to be run separately, although with this deal, Singtel’s data centre capacity see a big jump to reach around 2.8GW, with 0.8GW already operational.
David Luboff, co-head of KKR Asia Pacific and head of Asia Pacific infrastructure, says that digital infrastructure remains one of the most compelling long-term investment themes globally.
“STT GDC is well-positioned within this landscape, with a diversified footprint, strong development pipeline and a leadership team with a clear vision for global scale,” says Luboff.
“This transaction represents a rare opportunity to further support a high-quality platform and deepen our strategic partnership with Singtel,” he adds.
Singtel’s group CFO Arthur Lang says this deal is a “significant step” towards scaling the telco’s new growth engine in digital infrastructure.
“STT GDC's diverse geographical footprint increases our exposure to new markets and makes the Singtel Group a stronger data centre player with global reach,” he says.
“When added to our portfolio of data centre assets that includes Nxera in which KKR is also a capital partner, it meaningfully changes the business complexion of the Group while creating new opportunities for capital optimisation and growth,” adds Lang.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
ST Telemedia’s president and group CEO Stephen Miller says that as the data centre sector has fundamentally shifted, its exponential trajectory now requires a different scale of capital and specialised focus for STT GDC’s next exciting phase of continued growth.
“As a long-term, strategic shareholder, we have steadfastly supported STT GDC’s development and transformation. This transaction demonstrates our strategic stewardship while ensuring STT GDC’s ongoing sustainable growth with an optimal partner,” he adds.
Bruno Lopez, president & group CEO of STT GDC, says this expanded investment from KKR and Singtel underscores their confidence in the quality of STT GDC’s business and its growth trajectory.
“With the consortium’s global expertise, regional networks, financial strength and, most importantly, our shared ambition, STT GDC is poised to scale rapidly and capture the next wave of significant growth in cloud and AI demand,” he adds.
The transaction is expected to close by early second half of 2026, subject to customary closing conditions, including regulatory approvals.
The parties involved are all familiar to the data centre game.
Back in Sept 2023, KKR announced its investment of $1.1 billion for a 20% stake in Singtel's regional data centre business. Under terms of the agreement then, KKR has the option to increase its stake to 25% by 2027.
At that point in time, Nxera, the Singtel data centre business, was already operating capacity of 62 MW in Singapore and with several other data centre ventures underway, including in Indonesia, Thailand, and its own 58 MW data centre at Tuas in Singapore.
On June 18 2024, Singtel announced a joint data centre venture with TM at Iskandar Puteri. From a planned capacity of 64 MW, up to 200 MW will be built, depending on market demand.
In a way, this deal is some reshuffling of assets from one entity to another, but remain linked to Temasek.
Ravi Lambah, Temasek’s head of strategic initiatives, says that over the past 12 years, ST Telemedia (STT) has been instrumental in shaping ST Telemedia GDC into a leading global digital infrastructure platform.
“As a long-term shareholder of STT, Temasek has supported STT’s and STT GDC’s management teams and invested across multiple stages of STT’s growth journey, helping to build a strong foundation for STT GDC’s next wave of opportunities.
“We welcome the next chapter for STT GDC with KKR and Singtel, whose complementary strengths and shared vision are expected to accelerate STT GDC’s expansion and reinforce its leadership in digital infrastructure.
“This transition reflects Temasek’s commitment to backing businesses that create enduring value and contribute to resilient, future-ready infrastructure for an AI driven world,” he adds.
Strong adjacencies
Singtel is the more high-profile telco portfolio business of Temasek but Singapore Technologies Telemedia has chalked up a long track record of its own.
STT Telemedia is better known as the controlling shareholder of StarHub but over the years, it has also set up various telco-related ventures and also investments, at varying points in time, in mobile operators such as Indonesia's Indosat and Malaysia's U Mobile.
STT GDC was set up in 2014 as part of ST Telemedia's active push into the data centre space.
STT GDC grew rapidly via a series of acquisitions, including Virtus in 2017, which gave it a strong foothold in UK and other parts of Europe.
Meanwhile, KKR has been investing in Southeast Asia since 2005 and has deployed more than US$10 billion in equity across 40 companies in the region across all asset classes and strategies.
KKR sees favourable dynamics in the data centre sector globally, fuelled by digitalisation and exponential data creation growth across industries.
The investment in STT GDC creates “strong adjacencies” with KKR’s Southeast Asian digital infrastructure portfolio and builds on long-term secular tailwinds regionally and globally.
Besides Nxera, it holds a stake in Pinnacle Towers, a digital infrastructure platform in Asia focused on the Philippines; OMS Group, a leading neutral subsea telecom cable services provider in Asia Pacific.
Outside this region, KKR has taken stakes in CyrusOne, a global leader in the development and operation of sustainable, scalable, high-availability, and flexible data solutions headquartered in the US; Global Technical Realty, a build-to-suit and roll-up acquisition DC platform in Europe; Gulf Data Hub, one of the largest independent carrier and vendor neutral data center platforms in the Middle East; and CoolIT Systems, a leading provider of scalable liquid cooling solutions in Canada, through a KKR private equity fund.
