KKR, Singtel pay $5.2 billion for full control of data centre operator STT GDC

Adds dateline, shares reaction in paragraph 4, analyst's comment in paragraph 9-10, new fourth bullet and a subhead

By Yantoultra Ngui and Roushni Nair

SINGAPORE, Feb 4 (Reuters) - A KKR KKR.N and Singapore Telecommunications STEL.SI consortium will pay S$6.6 billion ($5.2 billion) in cash to take full control of ST Telemedia Global Data Centres (STT GDC), the companies said on Tuesday, in an intensifying race for AI capacity.

Based on the price the companies are paying for the 82% stake they do not already own, the deal gives the data centre operator an implied enterprise value of S$13.8 billion.

The transaction is the largest in Singapore in four years and biggest ever data centres deal in Southeast Asia, reflecting the growing need for computing capacity, power access and scale as demand booms for artificial intelligence and cloud services.

Shares of Singtel opened 1.9% higher to hit a record S$4.95 and were last up about 0.4% at S$4.88, outperforming Singapore's benchmark index .STI, which was flat.

Founded in 2014 and headquartered in Singapore, STT GDC is a data centre platform with about 2.3 gigawatts of design capacity across 12 major markets in the Asia Pacific, the UK and Europe, providing co-location, connectivity and around-the-clock support services, the companies said.

Reuters reported in November that KKR and Singtel were in advanced talks to buy more than 80% of STT GDC in a deal that would give them full ownership.

Under the deal, the KKR-led consortium will acquire the remaining 82% stake in STT GDC from its founding shareholder, ST Telemedia, via STT Communications Ltd, an indirect wholly owned subsidiary of Temasek Holdings, the companies said.

On completion, KKR and Singtel will hold 75% and 25% respectively, taking into account the conversion of existing redeemable preference shares held by both investors, the companies said.

Phillip Securities' head of research Paul Chew said the deal fits Singtel's broader digital infrastructure push, and the transaction "creates a funnel for growth" beyond 2028.

"It cements Singtel as one of the largest data centre operators in Asia," he said, adding that the deal's valuation in the high teens on an EV-to-EBITDA basis looked "fair" given STT GDC's growth pipeline and Asia exposure.

The cash consideration will be paid in two equal tranches, with half due at closing and the remaining amount payable around a year later, according to Singtel's exchange announcement.

The purchaser has secured debt facilities of about S$5 billion to fund the consideration as well as future capital expenditures and other corporate purposes, it said.

Singtel said it has committed S$740 million to the acquisition vehicle via an equity injection, with the investment expected to be funded from internal cash resources.

Singtel added the transaction is not expected to have a material impact on its credit rating or dividend policy.

A GLOBAL DATA CENTRE OPERATOR

KKR and Singtel first invested S$1.75 billion in STT GDC in June 2024. KKR currently owns about 14% of the firm, while Singtel, the city-state's biggest telecom operator, has a stake of more than 4%.

"Digital infrastructure remains one of the most compelling long-term investment themes globally," David Luboff, co-head of KKR Asia Pacific and head of Asia Pacific infrastructure at KKR, said, adding the deal was a "rare opportunity" to back a scaled platform and deepen its partnership with Singtel.

Temasek framed the transaction as a handover to new owners positioned to accelerate growth. "We welcome the next chapter for STT GDC with KKR and Singtel," Ravi Lambah, head of strategic initiatives at Temasek, said.

The deal is expected to close early in the second half of 2026, subject to customary closing conditions including regulatory approvals.

Citi C.N acted as lead financial advisor to the KKR and Singtel consortium and provided acquisition financing on the deal.

($1 = 1.2699 Singapore dollars)

(Reporting by Roushni Nair in Bengaluru and Yantoultra Ngui in Singapore; Editing by Subhranshu Sahu, Chris Reese and Sonali Paul)

((Roushni.Nair@thomsonreuters.com))