Global Investors Queue Up for Asia-Pacific Data Centre Operators Despite Rich Valuations
Global investors are flocking to invest in data centre operators in Asia-Pacific, undeterred by their rich valuations. The sector’s high valuations are driven by demand for artificial intelligence-based services, and many industry executives believe the regional data centres will continue to command high valuations due to the nascent nature of the industry and its growth outlook.
A recent deal between Blackstone and Australian data centre group AirTrunk set a valuation benchmark for the sector, with an implied enterprise value of over A$24 billion ($15.58 billion) or over 20 times the target’s forward core earnings. The process to sell a minority stake in Indonesian data centre NeutraDC has attracted interest from Singapore Telecommunications and BDx Data Centers, among others.
Other examples include a sale of a 20% to 30% stake in the data centre arm of Indonesian state-owned communication company Telkom, which could value the business at more than $1 billion. Australia’s HMC Capital also upped the IPO of its data centres business DigiCo REIT by A$100 million to A$2.75 billion, translating into a valuation of 26 times forward earnings.
The high valuations for the sector in Asia are partly linked to the nascent nature of the business in the region and to data centre operators adding more capacity as countries and companies respond to booming demand for AI. However, some investors have expressed concerns about execution risks in markets where power capacity and infrastructure are inadequate.
Despite these concerns, many believe that Asia-Pacific data centre markets will remain a positive growth story in the medium term, with growth in the sector expected to cool slightly as capacity comes online.
