AI boom set to fuel data centre deals in Asia this year

SYDNEY/HONG KONG/SINGAPORE, May 8 (Reuters) - Global private equity investors and asset managers are readying for billions of dollars worth of M&A and investments linked to data centres in Asia Pacific, as the artificial intelligence (AI) boom fuels demand for digital infrastructure.

The intense pace of deals in the world's most populous region comes as countries and companies respond to booming demand for AI, calling for more data capacity, industry executives said.

Asia Pacific, including Japan, has led dealmaking activities in the global data centre market this year, with M&A value totalling $840.47 million, more than half of the global amount, LSEG data showed.

In 2023, the region's data centre deals hit a record high of $3.45 billion, according to LSEG. That tally is set to be surpassed this year with at least a couple of large transactions in the pipeline.

A number of financial sponsors, including global investment powerhouse Blackstone Inc (BX.N), opens new tab, are looking to acquire AirTrunk, which owns 11 hyperscale data centres in Australia and the rest of the region, sources close to the transaction said.

AirTrunk owners, Macquarie Group (MQG.AX), opens new tab and Canada's Public Sector Pension Investment Board (PSP), are aiming to value the business at up to A$15 billion ($9.8 billion), sources said, in what could be Asia's largest data centre transaction this year.

AirTrunk, Blackstone, Macquarie and PSP declined to comment.

"The AI revolution is creating an unprecedented wall of demand for high quality data centre capacity," said Garren Cronin, managing director of Cadence Advisory, which advised on Australian data centre operator NEXTDC's $861 million capital raising in April.

"The new capacity that needs to be built in Asia Pacific in the next three to five years is simply mind blowing. My expectation is that deal flow in the data centre space will intensify in 2024."