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KKR-SingTel consortium to invest $1.3 billion in ST Telemedia Global Data Centres

FILE PHOTO: A woman using a mobile phone walks behind a Singtel signage at their head office in Singapore

By Ayushman Ojha and Yantoultra Ngui

(Reuters) -A consortium of U.S. investment firm KKR and Singapore Telecommunications will invest S$1.75 billion ($1.3 billion) in ST Telemedia Global Data Centres, one of Asia's biggest data centre providers, the parties said on Tuesday.

Reuters reported in late May that the KKR-SingTel consortium had emerged as the frontrunner to buy a minority stake worth some $1 billion in Singapore-based ST Telemedia Global Data Centres (STT GDC).

The deal comes amid growing interest and demand for data centres across the Asia Pacific as countries and companies respond to the boom in artificial intelligence.

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The companies said ST Telemedia, a Singaporean strategic investor wholly owned by the country's global investment company Temasek, would remain the majority shareholder in STT GDC.

The investment would translate to a minority stake of 18.3% by the KKR-SingTel consortium in STT GDC, according to an STT GDC spokesperson.

"With the industry experiencing unprecedented cloud and AI-led growth, this strategic partnership with KKR and Singtel will be a significant catalyst for STT GDC's next chapter of growth as a leader in the digital infrastructure industry," Bruno Lopez, STT GDC's president and group CEO, said in a statement.

The deal comprises the initial S$1.75 billion investment by the consortium via redeemable preference shares, with detachable warrants, according to the three parties' joint statement.

Upon exercise of the warrants in full, the consortium will invest an additional S$1.24 billion, the statement said.

The investment proceeds will be used to advance STT GDC's position in the markets it operates in, and to support its continuing international expansion and growth plans via organic and inorganic strategies, according to the statement.

Founded in 2014, Singapore-headquartered STT GDC has more than 95 data centres across 11 geographies, with its data centre portfolio commanding a total combined capacity of over 1.7 gigawatts of IT load, according to the statement.

KKR is making the investment from its Asia Pacific Infrastructure Investors II Fund. Earlier this month, at the Indo-Pacific Partnership for Prosperity, the company said that it planned to invest in infrastructure in the Indo-Pacific region.

The investment also adds to a recent partnership where New York-based KKR bought a 20% stake in SingTel's regional data centre business Nxera in September last year for S$1.1 billion.

The closing of the transaction is subject to conditions including regulatory approvals, the parties said in the statement.

Latham & Watkins has advised STT GDC on the deal, according to a separate statement by the global law firm.

($1 = 1.3538 Singapore dollars)

(Reporting by Ayushman Ojha in Bengaluru and Yantoultra Ngui in Singapore; Editing by Shailesh Kuber, Susan Fenton and Sharon Singleton)