Keppel Data Centres and Alpha DC Fund to build maiden greenfield centre in Malaysia

SINGAPORE (Nov 26): Alpha Data Centre Fund (Alpha DC Fund) and Keppel Data Centres Holding have agreed to develop a high-availability build-to-suit (BTS) data centre in an industrial park in Johor, Malaysia.

The customer is only identified as a “leading technology company”, and the value of the project is undisclosed.

Alpha DC Fund is managed by Alpha Investment Partners, a wholly-owned subsidiary of Keppel Corp’s asset management arm. On the other hand, Keppel Data Centres is the data centre division of Keppel T&T, a subsidiary of Keppel Corp.

In a Monday announcement, Keppel Group says the project will mark Alpha DC Fund and Keppel Data Centres’ first greenfield data centre in Malaysia.

Earmarked to be a data and research hub for the state, it will sit on approximately 261,000 sq ft of land and feature minimum Tier III equivalent specifications for concurrent maintainability, spread over 100,495 sq ft of gross floor area.

The data centre will be fully committed by the customer upon its expected completion in 2020.

The investment is structured to include a put option that gives Alpha DC Fund the option to require Keppel Data Centres to purchase the holding company indirectly holding the data centre and its underlying land title sublease within an agreed period.

When exercised, the put option will allow Keppel Data Centres to secure a steady cash flow stream from the data centre, while providing greater flexibility for the Alpha DC Fund to unlock value for investors within the fund life window.

The customer also has a call option to buy back the data centre, which can be exercised within an agreed period, says Keppel.

“Enterprises have been moving to rationalise their ageing data centre infrastructure, including moving many workload requirements to the cloud. In response, major cloud service providers and technology companies are expanding rapidly outside of top tier data centre markets to cater to this demand,” notes Wong Wai Meng, CEO of Keppel Data Centres.

“Demand for data centres has been increasing with the expansion of the digital economy and the Alpha DC Fund is pleased to be able to capitalise on such growth in the Asia-Pacific region for its investments. The addition of this greenfield investment provides diversification to the fund's existing portfolio,” adds Alvin Mah, CEO of Alpha Investment Partners.

As at 11:28am, shares in Keppel T&T and Keppel Corp are trading at $1.86 and $6.19, respectively.