Private equity firm PAG eyes cloud assets after $2bn bet

Aug 18, 2021 | News, SEAPEC

PAG will create a new digital infrastructure company after the Asia-focused private equity firm invested in $2bn of assets in the space, betting on the rising demand for data storage from the region’s fast-growing technology industry.

The business will focus on the acquisition of data centres, and fibre networks in Japan, Australia, and other Asian markets, Kris Kumar, the operation’s newly appointed chairman, said in an interview.

Hong Kong-based PAG is targeting an enterprise value for the entity of $10bn in 5 to 7 years through deals and organic growth, he said.

Global investors have been pouring money into Asia’s digital infrastructure, betting that the region’s tech boom will fuel demand. Underpinned by a move to 5G, and mobile Internet, companies and governments are boosting their cloud computing capacity.

The rising competition between companies, and United States-China geopolitical tensions have also boosted demand for data storage run by independent third parties.

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“The industry is growing at a fast pace globally,” said Kumar, former regional head of Asia-Pacific for Digital Realty Trust, a data centre landlord with a market capitalisation of more than $46bn. “Asia is starting from a smaller base with a higher growth rate.”

Kumar is planning to hire about 15 senior executives for the company covering all markets in Asia-Pacific within 6 to 8 months.

PAG’s real estate unit, which is run mainly out of Tokyo, has invested $2bn into the sector including in data centres in the Japanese city. The firm is discussing how to leverage those assets to build out the new company.

Globally, PAG manages around $40bn across private equity, real estate, private debt and absolute return funds.

The sector is luring other investors. Real estate private equity firm Gaw Capital Partners raised about $1.3bn for its Internet data centre platform last year to work with partners in China.

New York-based private equity fund Stonepeak Infrastructure Partners said last August that it was leading a $1bn investment in an Asia data centre operator.

The Asian data centre market is expected to grow at about 10% to 12% annually through 2024, Structure Research estimates.

Source: The Star 

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