Private equity investors and asset managers are gearing up for a surge in mergers and acquisitions (M&A) and investments within Asia Pacific's data centre sector, driven by the rising demand for digital infrastructure due to the AI boom. The newborn trend is particularly pronounced in Asia Pacific, which has seen a record high in data centre deals, with M&A activity totalling$840.47 million last year alone.

The rapid expansion of AI capabilities by technology giants such as Microsoft, Amazon, Alphabet Inc, and Meta Platforms is a significant driver behind the increasing demand for data centre capacity in the region. Microsoft, for instance, recently announced a$2.2 billion investment in Malaysia to bolster its cloud and AI services across Asia, with plans to establish its first Asian data centre in Thailand.

Several major deals are in the pipeline, including the potential sale of a stake in Telkom Indonesia's data centre business worth$1 billion and Japan's NEC contemplating a$500 million data centre sale. Additionally, Bain Capital is seeking financing for Chindata's international assets and its China business, while Goldman Sachs Asset Management has invested over$1 billion in data centre development in Asia over the past three years.

Why does it matter?

The surge in data centre investments underscores the unprecedented demand for high-quality data centre capacity fueled by the AI revolution. As AI applications drive massive data consumption, the need for increased capacity becomes paramount, signalling a robust outlook for the data centre market in Asia Pacific in the coming years. With consistent investments and strategic partnerships on the horizon, industry experts anticipate intensified deal flow within the data centre space throughout 2024 and beyond.