Keppel JV to Divest 2 Hyper-scale Data Centres in Singapore

In one of the largest data centre transactions in Southeast Asia, Singapore’s Keppel Ltd on Tuesday announced the divestment of a Keppel-led data centre joint venture (Keppel JV) to Keppel DC REIT for a total gross divestment price of $1.03 billion.

The proposed transaction will be executed in stages and is expected to be completed by end-2025, subject to approvals by the relevant authorities. It is subject to and conditional upon, among others, the approval of the unitholders of Keppel DC REIT at an extraordinary general meeting (EGM).

The Keppel JV, a 60-40 joint venture between Keppel’s Connectivity Division and Cuscaden Peak Investments Private Limited, owns the Keppel Data Centre Campus at Genting Lane in Singapore (Campus), and comprises two completed and fully contracted data centres – Keppel DC Singapore 7 (KDC SGP 7) and Keppel DC Singapore 8 (KDC SGP 8) – as well as a vacant land plot earmarked for a third data centre, which has been carved out from the proposed transaction.

The construction of KDC SGP 7 and KDC SGP 8 was funded by the Keppel JV, Keppel’s private fund Alpha Data Centre Fund, and its parallel fund (collectively, ADCF), as well as co-investors.

Upon the completion of the proposed transaction and the exercise of the call option, Keppel DC REIT will fully own KDC SGP 7 and KDC SGP 8, while Keppel will continue to serve as the operator and facility manager for the two data centres.

This proposed acquisition by Keppel DC REIT is expected to be 8.1% Distribution Per Unit (DPU-accretive) and will bolster its portfolio with two AI-ready hyper-scale data centres within a campus in Singapore, which is Asia’s top data centre hub.

KDC SGP 7 and KDC SGP 8 are 100% contracted to global hyper-scalers from across the cloud services, internet enterprise and telecommunications sectors on a colocation basis. The proposed acquisition will expand Keppel DC REIT’s AUM by 36% to $3.88 billion with 25 data centres across Asia Pacific and Europe, as well as strengthen its foothold in Singapore.

Keppel’s share of the total gross divestment price of $1.03 billion shall be approximately $209.10 million, based on Keppel’s effective stake in the Keppel JV, which includes both its interests in the Keppel JV and indirect interests via ADCF.

The Campus’ remaining vacant land plot, which is not part of the proposed transaction, will be sub-leased to Keppel’s private funds, namely Keppel DC Fund II and the upcoming Keppel DC Fund III, where Keppel will have the opportunity to develop Keppel DC Singapore 9, the third data centre in the Campus, together with its two data centre private funds.

Keppel DC REIT will acquire an initial 49% interest in the Keppel JV, as well as subscribe for two new classes of securities issued by the Keppel JV for up to $1.03 billion, entitling Keppel DC REIT to 99.49% of the economic interest from KDC SGP 7 and KDC SGP 8.

Call Option Granted

Keppel DC REIT will also be granted a call option, which it expects to exercise sometime in the second half of 2025, to acquire the remaining 51% stake in the Keppel JV from Keppel, which holds the remaining 0.51% economic interest.

As part of the proposed transaction, Keppel DC REIT shall pay an additional $261.38 million to the Keppel JV’s shareholders, ADCF, and co-investors, should a 10-year land tenure lease extension to 2050 be approved for the Campus by the relevant authorities.

In a separate announcement, Keppel DC REIT said that it plans to raise $750 million through a private placement and preferential offering. The target price range for the new units is set between $1.55 and $1.59 for the private placement and $1.52 to $1.55 for the preferential offering.