Digital Edge raises $1.6bn as Asia’s data arms race heats up

Data is the new oil, they say, and that’s certainly true in Asia-Pacific, where major global investors have been pouring big money into data centers in recent years.

The latest winner is Singapore-based Digital Edge, which develops and operates data centers across Asia. The company announced on Monday that it had raised over $1.6 billion in a mix of equity from existing and new investors and debt financing, to bankroll its next phase of growth – a much-needed expansion to meet the increasingly complicated cloud and AI demands from its customers.

The equity raise brought in some of the world’s largest institutional investors and sovereign wealth funds.

Founded in 2020, Digital Edge now owns and operates 21 data centers with more than 500 megawatts of IT load in service and under construction. The company also has 300 MW planned for development in Japan, Korea, India, Malaysia, Indonesia and the Philippines.

The news follows Blackstone’s mammoth acquisition of Australian data center operator AirTrunk last year, in a deal that valued it at more than AUD$24 billion. The Canada Pension Plan Investment Board was also in on the deal to buy AirTrunk, which has data center facilities in Hong Kong, Japan, Malaysia, and Singapore.

Those big deals reflect an industry that’s been booming in Asia-Pacific, with no sign of slowing down any time soon, according to analysts and market reports. The surging demand for data centers is being driven by digitalization, AI, cloud computing and 5G network expansion, as well as a regulatory push, in countries like Indonesia and Vietnam, to have data stored locally.

Spreading the love

So far, it’s been more developed markets like Singapore, Australia and China that have been getting most of the love in terms of data center investment in the region, according to real estate company CBRE. That’s because of their scale, or digitization initiatives stemming from growing data privacy concerns, national security and surveillance requirements, and for compliance.

But the picture is changing, as countries outside these more developed economies are starting to get in on the action too. As emerging markets expand their digital economies and develop their own data protection laws, more companies are leveraging the tax incentives, cheaper infrastructure, electrical and manpower costs to set up data centers domestically.

In particular, Malaysia, Indonesia and Thailand are expected to see huge growth in the sector, with their capacities potentially more than doubling by 2026, according to CBRE.

As for the picture across Asia-Pacific, Moody’s Ratings forecasts data center capacity in the region to grow at a compound annual average rate of almost 20% per year until 2028, involving an investment of about $564 billion.

Wooing Big Tech

Giant tech companies have already made promises in Southeast Asia. Google, for example, is building a $2 billion data center in Malaysia and has pledged to invest $1 billion in Thailand to build data centers and expand the country’s cloud infrastructure.

And the rise of AI is only going to fuel that demand.

“The trend towards generative AI and potentially agentic AI, which can enhance productivity and competitiveness, will lead companies to rethink and redesign their strategies to incorporate cloud computing and store their databases on the cloud,” Niko Margaronis, an analyst at brokerage BRI Danareksa Sekuritas, says.

Generative AI refers to the use of AI to create new content such as text, image, and music, while agentic AI can make decisions, take actions, and learn on its own.

“Data is indeed the new oil,” he says.

So what’s next?

Clearly, Asia-Pacific is shaping up as a new hotspot for investors looking to strike it big in the data center game.

For those looking to dive in, there are funds and real estate investment trusts that have exposure to data centers in the region, such as Equinix, Digital Realty and Iron Mountain.

But it’s not a totally smooth landscape to navigate. While the concept of data sovereignty continues to evolve and cybersecurity remains a challenge, some markets may also grapple with a shortfall in finding qualified workers, CBRE says in its report. Yet those challenges could also give investors the benefit of “first-mover advantage,” especially in emerging markets, it said.

Add to that those incentives being dangled by governments, and the data center oil rush starts to look even more appealing. For retail investors, 2025 could be the time to join the big players in getting in on the action.

Edited by Tim Hume and Victor Loh. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com