How Keppel Will Power Data Centre Growth with New Funding
Keppel Ltd has secured approximately S$4.9 billion in Funds under Management (FUM) through nearly S$2.0 billion in new capital commitments from global institutional investors across three of its flagship funds.
The new commitments span the company's Keppel Data Centre Fund III (KDCF III), Keppel Education Asset Fund II (KEAF II) and its Sustainable Urban Renewal (SUR) strategy, as the organisation is eager to showcase the continued confidence of its investors.
“The securing of about S$2.0 billion in capital across Keppel's flagship funds reflects the resilient demand for high-quality alternative real assets anchored to macrotrends such as climate change and energy transition, urbanisation as well as rapid digitalisation and the AI wave,” says Christina Tan, CEO of Fund Management and Chief Investment Officer at Keppel.
Driving sustainable data centre innovation in APAC
Notably, KDCF III achieved its first close with US$580m (S$786 million) in initial capital commitments from various global institutional investors.
The fund will focus specifically on sustainable data centre investments across the Asia Pacific (APAC) region, with a particular emphasis on facilities with pre-commitments or high leasing certainty from hyperscale customers.
This approach serves as a way to mitigate risk for fund investors by offering them greater certainty, particularly when it comes to the data centre sector experiencing surging growth on account of AI.
The data centre fund will operate within Keppel's integrated ecosystem, leveraging synergies across the company's operating divisions. The company says this will enable the fund to better access renewable energy sources and advanced cooling infrastructure, which have become essential requirements for hyperscale operators seeking to address sustainability concerns in their data centre operations.
KDCF III will also benefit from Keppel's established customer relationships with hyperscalers and could potentially provide access to off-market opportunities within the Keppel portfolio.
Christina states: “This significant milestone brings us closer to our interim FUM target of S$100 billion by 2026, with ambitions to reach S$200 billion by 2030.”
Driving forward with a sustainable urban renewal strategy
Another aspect of Keppel’s recent announcement involves its Sustainable Urban Renewal strategy, which secured a S$760 million commitment from one of Europe's largest pension funds.
This latest commitment brings the strategy's total FUM to approximately S$4.3 billion and targets value-added real estate opportunities aimed at decarbonising the build environment.
The strategy specifically focuses on commercial, living, life sciences, hospitality and logistics sectors in Singapore, South Korea, Japan, Australia and first-tier cities in the People’s Republic of China.
Keppel has been committed to sustainable data centre development for some time, with its Keppel DC REIT Ireland arm having implemented renewable energy agreements covering 92% of its Irish operations' power demand.
This not only aimed to mark a shift in how colocation providers approach sustainability in the Republic of Ireland, but also to respond to increasing computational demands, including AI workloads.
“We would like to thank our Limited Partners for their trust and confidence in Keppel as a global asset manager and operator,” Christina adds. “Notwithstanding the current volatile international environment, Keppel is well-positioned to offer both critical solutions that the world needs and defensive investment products that can help to steady investors' portfolios.
“We are committed to delivering strong returns to our Limited Partners leveraging Keppel's deep operating capabilities in sustainability and connectivity solutions.”
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