In Focus: CPP Investments' latest data centre deal rides APAC boom

A recent deal in which Canada Pension Plan Investment Board (CPP Investments) and Blackstone agreed to acquire data centre platform AirTrunk from Macquarie Asset Management and other investors like PSP Investments reinforces the strong appeal of Asia Pacific data centres among global institutional investors.

The landmark A$24 billion ($16 billion) valuation of of the data centre platform AirTrunk represents an eight-fold increase from A$3 billion just four years ago when Macquarie Asset Management and PSP Investments acquired a majority stake.

The strategic sale of AirTrunk reflects the soaring appetite of asset owners to invest in digital infrastructure plays that cater to escalating data, cloud and artificial intelligence (AI) demand.

Since its 2015 inception in Australia, AirTrunk has swiftly expanded across Asia Pacific to Hong Kong, Japan, Malaysia, and Singapore.

For CPP Investments -- which will hold 12% in AirTrunk after regulatory approval -- the involvement in this deal aligns with its longstanding sector interest.

The $463 billion Canadian pension fund has been investing in Asia-Pacific data centres since 2017, when it announced its first direct investment in partnership with Alpha Investment Partners and Keppel Data Centres.

Also read: CPP Investments' APAC chief shares secrets of its success

"We've witnessed significant growth in this space, fuelled by strong demand for digital infrastructure and, more recently, the increasing adoption of artificial intelligence,” said Max Biagosch, senior managing director at CPP Investments on September 4.

BEHIND THE GROWTH

Under MAM and PSP Investments' stewardship since 2020, AirTrunk has expanded from five data centres to 11 sites across the region, with capacity surging from 450MW to over 1.8GW.

Also read: Institutions take on higher risks with Asia data centre bets

MAM and PSP Investments also prioritised AirTrunk's environment, social and governance (ESG) initiatives, including securing the largest sustainability-linked loan by a data centre operator globally and setting a target of 100% renewable energy use by 2030.

SURGING DEMAND

The Asia-Pacific data centre landscape is experiencing unprecedented growth, driven by strong cloud demand, particularly in Australia and Japan, along with the rapid development of digital infrastructure in emerging markets like India and Malaysia.

The total supply of the region’s data centre capacity more than tripled between 2018 and 2023, as these countries are establishing data centre-friendly policies, improving connectivity, and developing large campus-style facilities to attract both local and international players, according to DC Byte's Global Data Index report in 2024.

Also read: Data centre investors flood emerging Asia as core markets dry up

The explosion of AI is also a significant factor in reshaping the industry.

Data centre operators are receiving enquiries for AI-specific requirements, including higher power densities than current designs typically accommodate.

This trend is expected to drive innovations in site selection, design specifications, and technologies used in high-density AI data centres.

Government initiatives are also playing a crucial role. For instance, Korea is pushing for the decentralisation of data centres from the Seoul Capital Area, leading to the development of massive campuses in other parts of the country.

Also read: Institutions face Asia data centre shortage amid high demand

The recently launched Asia-Pacific Data Centre Association (APDCA) aims to work with governments on policies and regulations to foster industry growth.

The Asia Pacific region is poised for continued growth. The influx of international operators, new platforms, and interest from both global and local real estate developers and investment funds are all contributing to this trend, according to the DC Byte report.

While growth rates may stabilise as markets mature, the region still has significant potential for development, especially as underserved markets improve their power and telecoms infrastructure, it said.