CPP Investments doubles down on Korean digital infrastructure
CPP Investments has entered into a $710 million (C$1 billion) joint venture with Pacific Asset Management to develop carrier-neutral hyperscale data centres in South Korea, underscoring its commitment to Asia’s burgeoning digital infrastructure market.
The $480.5 billion Canadian pension fund has already allocated $203 million to the venture's initial seed project and outlined an ambitious roadmap for future growth.
"We expect to deploy the remaining capital over the next 3-5 years as we identify strategic opportunities in the market," a spokesperson for CPP Investments told AsianInvestor.
CPP Investments
This latest venture builds upon CPP's established presence in Korea's data centre sector, following their successful 2022 partnership with Pacific AMC for the Jukjeon Data Centre in eastern Seoul.
"We will target both global cloud service providers and domestic Korean tech companies as we expand our footprint in this dynamic market," the spokesperson added.
"The demand for data centres in Asia Pacific has been on the rise, driven by the continued need for cloud computing and the increasing global adoption of artificial intelligence," said Max Biagosch, senior managing director, global head of real assets and head of Europe for CPP Investments.
"In South Korea, businesses continue to seek high-quality digital infrastructure to support the country's emergence as a digital technology hub."
APAC EXPANSION
The announcement reflects the Canadian fund’s broader strategic push into Asia's digital infrastructure sector.
In a separate transaction this September, the fund agreed to acquire a 12% stake in regional data centre operator AirTrunk.
The deal, which involved Blackstone as a co-investor, valued AirTrunk at $15.6 billion - representing an exceptional eight-fold increase from its $1.94 billion valuation in 2020.
All these ventures highlight CPP Investments' strategy of leveraging local expertise in its Asia deals.
CPP Investments
"Local knowledge is very important because you need to do due diligence, understand local corporates, and know the good, the bad, and the dangerous. Then you invest with your eyes wide open," Agus Tandiono, managing director and head of Asia Pacific at CPP Investments, told AsianInvestor earlier this year.
"For real estate, when we build logistics companies or data centres, we always have local partners," said Tandiono.
This rapid value appreciation of these assets underscores the sector's explosive growth potential, particularly as artificial intelligence adoption accelerates.
Speaking about market dynamics earlier this year, Biagosch said, "We've witnessed significant growth in this space, fuelled by strong demand for digital infrastructure and, more recently, the increasing adoption of artificial intelligence."
KOREAN MARKET MOMENTUM
Korea's data centre landscape is experiencing a significant transformation, driven by both international and domestic factors, according to Suhee Min, senior director of capital markets at JLL Korea.
"In Korea, US-based cloud providers continue to dominate the market. On the ground, with increasing demand from local companies, many cloud providers are transferring their services to meet corporate needs, which is placing more importance on data centres,” Min told AsianInvestor.
JLL
“Additionally, the expansion of colocation by enterprises is expected to drive further demand in Korea in the future."
The market's expansion is further supported by government initiatives promoting data canter development beyond the Seoul Capital Area.
This decentralization push has catalysed the development of large-scale campus facilities across the country, aligning with broader regional trends that have seen Asia-Pacific's data centre capacity triple between 2018 and 2023.
Looking ahead, Min remains optimistic about the sector's prospects.
"The demand for data centres in Korea is expected to grow further in the future. We see local companies are increasingly recognising the need for redundancy in their server halls and have started preparing for it," she said.
This strategic focus, combined with the explosive growth of AI applications that demand higher power densities, positions Korea’s data centre market for sustained expansion in the coming years.