CapitaLand Investment establishes China data centre development fund with $1 bil in investments

By Felicia Tan

/ The Edge Singapore |

February 22, 2023 11:23 AM SGT

The total equity committed to the fund is $530 million. Photo: CLI.

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SINGAPORE (EDGEPROP) - CapitaLand Investment (CLI) has established a China data centre development fund that has committed to invest in two hyperscale data centre development projects in Greater Beijing.

Upon the completion of the projects, the fund, named CapitaLand China Data Centre Partners (CDCP), will add around $1 billion to CLI’s funds under management (FUM).

The total equity committed to the fund is $530 million with existing and new global institutional investor clients holding an 80% effective stake in CDCP, and CLI holding the remaining 20%.

The data centre development projects are expected to be completed in 2025. They are expected to deliver over 100 megawatts (MW) of power to meet the growing demand from Beijing. They are also poised to capture strong demand from the Chinese capital with their close proximity to established data centre clusters and key network nodes of leading Chinese cloud service providers and internet companies.

The accelerated growth of digital usage is driving demand for data centres, says CLI. China’s data centre market grew 34.6% y-o-y to $60 billion in 2021 following a 43.3% y-o-y growth in 2020.

According to CLI, the fund is in line with its strategy to grow its portfolio of new economy assets under management (AUM) and enhance its long-term business resilience.

The two data centres will be designed, built and certified against Leadership in Energy and Environmental Design (LEED) Gold standards. They will incorporate energy-saving solutions, such as high efficiency fan wall cooling systems, adopt temperature management best practices, and recycle waste heat from the servers to heat offices.

“As one of the fastest growing new economy asset classes providing critical digital infrastructure for the global economy, data centres present a tremendous opportunity and are a key strategic focus for CLI,” says Patrick Boocock, CEO of CLI’s private equity alternative assets. Boocock also oversees the growth of CLI’s global data centre business.

“We are seeing strong investor interest as the surge in demand for cloud computing, 5G technology, and e-commerce are driving growth in this sector. Leveraging our strength in real estate, we are actively building our capabilities in real assets and growing our alternative assets platform. CDCP is our third data centre development fund, following the establishment of two such funds in South Korea. We are excited to bring our capabilities to the China market and advance our ambition of becoming a major global digital infrastructure player,” he adds.

“As a leading global real estate investment manager with about 30 years of experience in China, we are able to leverage our wide network and deep expertise to bring quality assets to international investors who are keen to invest in China across different asset classes including data centres. CLI’s competitive advantage lies in our position as a vertically integrated group in China with a full range of capabilities, from investment sourcing, development, having a strong customer network to operations,” says Puah Tze Shyang, CEO of CLI China, adding that CLI has $46 billion of AUM in the country.

“CDCP will invest in two highly sought-after data centre projects in prime locations. China’s data centre market is currently the second largest in the world and the largest in Asia Pacific, and is projected to grow 24% annually until 2025. There is strong interest in CLI’s future data centre projects in China and Asia Pacific at large, and we are actively seeking to grow in this sector,” says Michelle Lee, managing director of CLI’s private funds (data centre).

Shares in CLI closed 3 cents lower or 0.78% down at $3.82 on Feb 21.

This article first appeared on The Edge Singapore.

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