Keppel DC partners with Alpha DC Fund in first greenfield data centre in Malaysia

New centre expected to be completed by 2020

Keppel Data Centre) and the Alpha DC Fund have entered into an agreement to develop and operate their first greenfield data centre in Johor, Malaysia.

The new centre will sit on approximately 261,000 sq ft of land and feature minimum tier-3 equivalent specifications for concurrent maintainability, spread over 100,495 sq ft of gross floor area within an industrial park.

Expected to be completed by 2020, the initial development of the data centre and subsequent facilities management will be undertaken by Keppel Data Centres.

The Alpha DC Fund entered into agreements with a leading technology company (the customer) to develop a high-availability build-to-suit data centre.

“Enterprises have been moving to rationalise their ageing data centre infrastructure, including moving many workload requirements to the cloud,” said Wong Wai Meng, CEO of Keppel Data Centres.

“In response, major cloud service providers and technology companies are expanding rapidly outside of top tier data centre markets to cater to this demand.

"Our customers in these segments recognise the value that Keppel Data Centres brings to the table when planning future IT workloads and data centre deployments. We are proud to be partners enabling our customers' regional expansion requirements."

The investment is structured to include put and call options, which are exercisable under certain conditions.

The put option granted to the Alpha DC Fund gives the Fund the option to require Keppel Data Centres to purchase the holding company indirectly holding the data centre and its underlying land title sublease within an agreed period.

When exercised, the put option will allow Keppel Data Centres to secure a steady cash flow stream from the data centre, while providing greater flexibility for the Alpha DC Fund to unlock value for investors within the fund life window.

The customer also has a call option to buy back the data centre, which can be exercised within an agreed period.

“Demand for data centres has been increasing with the expansion of the digital economy and the Alpha DC Fund is pleased to be able to capitalise on such growth in the Asia-Pacific region for its investments,” said Alvin Mah, CEO of Alpha Investment Partners, the manager of the Alpha DC Fund.

“The addition of this greenfield investment provides diversification to the fund's existing portfolio.”