Keppel T&T inks deal to develop data center in Malaysia

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Keppel Telecommunications & Transportation said on Monday that its data center division, Keppel Data Centres, inked a deal with Alpha Data Centre Fund to develop and operate their first data center in Malaysia.

A wholly owned subsidiary of Alpha DC Fund entered a deal with a “leading technology company,” which is the customer, to develop a high-availability, build-to-suit data center in Johor, Malaysia, according to the pre-market open SGX filing.

The data center will be in an industrial park, which is earmarked as a data and research hub for the state, Keppel T&T said in Monday’s filing. The data center is expected to be completed in 2020 and it will then be fully committed by the customer.

Keppel Data Centres will handle the data center’s development and facilities management, it said.

The investment includes put and call options, with Alpha DC Fund given a put option to require Keppel Data Centres to purchase the holding company, called Juventas DC Ltd., or JPL, which indirectly owns the data center and the underlying land title sublease, it said.

“When exercised, the put option will allow Keppel Data Centres to secure a steady cash flow stream from the data center, while providing greater flexibility for the Alpha DC Fund to unlock value for investors within the fund life window,” the filing said. “The customer also has a call option to buy back the data center, which can be exercised within an agreed period.”

Keppel T&T was optimistic on the deal as a gateway transaction.

“The proposed transaction enables the company to land the first data center deal with the third party customer, which strategically opens doors to develop and operate other potential projects for the third party customer in Asia Pacific and Europe,” it said in the filing.

Keppel Data Centres can also benefit from an investment return from Alpha DC Fund, as it is an around 65.3 percent investor in Alpha DC Fund, with the remainder held by unrelated third parties, it said.

Alvin Mah, CEO of Alpha Investment Partners, which manages the Alpha DC Fund, pointed to increasing demand for data centers globally.

“The Alpha DC Fund is pleased to be able to capitalize 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,” Mah said.

Keppel Data Centres is an indirect 70:30 joint venture between Keppel T&T and Keppel Land, which is a wholly owned subsidiary of Keppel Corp., it said.

Alpha Investment Partners is a wholly owned subsidiary of Keppel Capital, which is the asset management arm of Keppel Corp., it said.

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