ESR raises over US$1 billion in first close of inaugural data centre fund

REAL asset manager ESR Group on Monday (Jul 25) announced the first close of more than US$1 billion in equity commitments for its inaugural data centre fund.

The Hong Kong-listed company said in a statement it will raise a separate discretionary capital sleeve to co-invest into its Data Centre Fund 1, which will likely close the balance of the fund at the hard cap of US$1.5 billion.

The partners, which include sovereign wealth and pension funds, have an “upsize” option to commit additional equity of US$1.5 billion.

This would bring the total investment capacity to US$7.5 billion over time, ESR said.

ESR’s current data centre development portfolio comprises data centre projects located in Hong Kong, Osaka, Tokyo, Seoul, Sydney, Mumbai and Singapore, representing over 300 megawatts (MW) of capacity.

Among these projects is a key asset the group acquired in Osaka, which will be developed into a multi-phase data centre campus with a development potential of up to 95 MW to serve both hyperscalers and co-location operators, ESR said.

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“The rapid surge in data consumption, fuelled by continued growth in cloud computing and social media use, continues to drive investor interest in APAC (Asia-Pacific) data centres, with investment in the sector soaring to record levels in 2021,” the company said, citing CBRE research data.

It added that data consumption has grown 4 times over the past 5 years in Asia, according to Statista, while CBRE research showed that direct investment in the APAC data centre sector totalled US$4.8 billion in 2021. That is more than double the previous high of US$2.2 billion in 2020, surpassing investment volumes for the past 4 years combined.

Diarmid Massey, chief executive of ESR Data Centres, said the company’s ambition is also to offset high energy consumption by aligning its environment, social and governance strategy to convert some of its existing assets into large data centres and explore sustainable options through renewable energy generation from the rooftops.

Shares of ESR Group in Hong Kong closed 1.7 per cent higher at HK$19.76.