AIIB to invest $150 mn in development of data centres serving Asia

Multilateral bank Asian Infrastructure Investment Bank (AIIB), will invest $150 million in the development of data centers that mostly serve emerging Asia.

Beijing-based AIIB, where India is a key founding member, will channelise funds through the Keppel Data Centre Fund II (KDCF II), a private equity vehicle managed by Alpha Investment Partners Limited (Alpha).

This is AIIB’s first data center project. Multilateral development banks have been investing in digital infrastructure in the past. Now, such investments are becoming more essential nowadays with the acceleration of 5G technology and other high-speed/supercomputing digital infrastructure due to the pandemic.

AIIB’s investment of $100 million through a parallel fund structure and $50 million through co-investments marks the final close of KDCF II. The fund is focussed on strategic investments in the fast-growing data center sector with a focus on Asia Pacific.

Many low- and mid-income countries lack their own domestic data infrastructure, and the disparities in data center penetration among countries with different income levels are wide. This reflects shortcomings in the investment climate where major global investors have largely shunned investing in emerging and frontier economies. This project will enhance capital mobilisation to develop data centers serving emerging Asia.

Dongik Lee, director general, Banking Department (Region 1), said the digitalisation mega trend is re-shaping global markets and business operations. This trend has been accelerated by the COVID-19 pandemic. AIIB’s Digital Infrastructure Sector Strategy has identified data centers as essential components of the digital ecosystem and attractive investment targets.

AIIB will conduct a prior review of investments presenting significant environmental and social (ES) risks like involuntary resettlement, adverse impacts on Indigenous Peoples, environment, community health and safety.