The rapid advancement of artificial intelligence is fueling a surge in investments for data centers across Asia, leading to a wave of record-breaking loans and a growing pipeline of new deals.
In just two weeks, two major Asian data center firms have confirmed their loans and investors, indicating a commitment to expand their operations in Malaysia. This is due to Malaysia’s emergence as a hub for AI-related skills.
These deals highlight how this industry is attracting a wide range of investors, from different sectors like banks to real estate firms, as the growing demand for AI is leading to record-breaking loans and an increasing number of deals.
Furthermore, Asia has become a significant hotspot for data centers, with demand projected to increase by approximately 32 percent annually through 2028, according to data from real estate services firm Cushman and Wakefield.
This growth rate substantially outpaces the expected 8 percent growth rate in the United States. As reported by Bloomberg, a major challenge could be from US tariff policies that may impact the industry.
Yemi Tepe, a partner at the law firm Morrison Foerster, who has worked on tech-related financial transactions, said that “The surge in demand for data centre capacity has piqued the interest of an ever-growing diverse pool of capital investors and providers across Asia Pacific.”
Tepe further added that, “Banks have historically been the main source of funding for large scale projects, but the emergence of private credit and infrastructure funds have expanded financing avenues.”
Among the recent financing activities, Bridge Data Centres, owned by Bain Capital, secured a $2.8 billion facility for its operations in Malaysia, while DayOne, formerly known as GDS International, launched a borrowing initiative totaling $3.4 billion.
Additional opportunities for financing in Asia are on the increasing scope. Which includes firms like Singapore-based Firmus Technologies, which is seeking a $120 million private loan, and India’s Yotta Data Services Pvt., which is in discussions with private credit funds to raise around $500 million for its data center parks.
Moreover, as pressures have increased in the world for new technology, especially between the Chinese city Beijing and the US city Washington, it has been noted that the major tech giants are expanding their investments beyond China.
Asia is also receiving investments worth hundreds of billions of dollars, mainly in critical components such as semiconductors. However, these upsets in supply chains could lead to uncertainties in project timelines.
Tepe also said that, “These geopolitical risks could lead to higher financing costs, lower investor confidence and increased credit risk for financiers.”
At last, Tepe said that, “Consequently, investors may demand higher risk premiums or choose to divest from projects tied to Chinese entities, potentially stalling growth in the Southeast Asian data center market.”
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