Keppel Launches Data Center Fund for Asian, European Assets

The fund had its first closing with more than $500 million in investments and is aiming for $1 billion.
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Noting that the COVID-19 pandemic has accelerated the pace of digitalization for many businesses and governments further spurring the growth of the data center sector, Keppel Capital Holdings Pte. Ltd. has launched its second data center fund.

Keppel Data Centre Fund II, which will focus on strategic investments in Asia-Pacific and Europe, has attracted initial capital commitments of more than $500 million. The fund has a target size of $1 billion.

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The first data center fund, Alpha Data Centre Fund, was launched in 2016. The portfolio now spans 1.4 million square feet and has investments in key hubs including Singapore, Malaysia, Indonesia, Germany, Australia and China.

KDC Fund II is managed by Alpha Investment Partners Ltd., a private fund manager under Keppel Capital. Alpha is the asset manager of Keppel Corp., one of Singapore’s major multinational companies that focuses on solutions for sustainable urbanization, energy and environment, urban development, connectivity and asset management. KDC Fund II will leverage Keppel Data Centres Holdings’ expertise in developing, operating and maintaining quality data centers to capture investment opportunities in greenfield and brownfield data center assets.

Alvin Mah, Alpha CEO, said in a prepared statement KDC Fund II will put sustainability at the core of the strategy and will, whenever possible, tap Keppel Group’s expertise in sustainable technology and energy efficiency to develop greener data centers. Mah said he expects that will set KDC Fund II apart from others.

Wong Wai Meng, CEO of Keppel Data Centres, said in prepared remarks that the firm has been collaborating with industry leaders to explore how the carbon footprint of data centers can be reduced. He cited several developments to do so including the development of floating data center parks, tapping cold energy released from LNG re-gasification for cooling, hydrogen infrastructure for power generation and accelerating the adoption of renewable energy as well as the development of carbon capture, utilization and sequestration (CCUS) systems.

KDC Fund II and Keppel Data Centres also plan to tap other business units in the group for expertise in cooling and use of renewable energy, including Keppel Infrastructure and Keppel Renewable Energy. 

U.S. Office Deals

Keppel Capital has also made its mark in the U.S., launching Prime US REIT on the Singapore Exchange in 2019 with KBS, a commercial real estate investor that serves as the U.S.-based asset manager of the REIT’s portfolio. Earlier this year in February, Prime US REIT acquired the 24-story, 480,171-square-foot Park Tower, a Class A office building in downtown Sacramento, Calif., for $165.5 million from Hines.

In 2017, an earlier REIT, Keppel-KBS US REIT, acquired 11 U.S. office properties totaling about 3.2 million square feet from KBS Strategic Opportunity REIT Inc. for about $804 million. The portfolio consisted of assets in metro areas of Seattle; Sacramento; Denver; Houston; Atlanta; Austin, Texas; and Orlando, Fla.