Mubadala leads $500m investment round for data centre operator Princeton Digital

Abu Dhabi fund invests $350m in the Singapore-based company

Mubadala has taken a minority stake in Singapore-based data centre operator Princeton Digital Group. Photo Mubadala

Mubadala Investment Company, Abu Dhabi's strategic investment arm, led a funding round of more than $500 million for Pan-Asia data centre operator Princeton Digital Group as it continues to build its digital infrastructure portfolio.

The $350m equity investment by Mubadala is its first in the Singapore-based company, it said on Wednesday.

Existing PDG shareholders – Warburg Pincus, the global growth investor with $73 billion in assets, and Ontario Teachers’ Pension Plan Board, which manages a portfolio of more than C$227.7bn ($178.6bn) – also invested.

“PDG is a leading data centre infrastructure platform operating in an attractive market with strong tailwinds and catering to rising demand from the hyperscale segment, and more broadly Asia’s digital economies,” said Khaled Al Qubaisi, chief executive for real estate and infrastructure investments at Mubadala.

Mubadala will work jointly with PDG’s management to accelerate its growth and create sustainable and long-term value, while supporting Asia’s digital infrastructure development as a vital enabler to economic progress, Mr Al Qubaisi said.

The rise in remote working and online learning during the Covid-19 pandemic has sped up the growth of data centres around the world.

The data centre services market, which was valued at $48.9bn in 2020, is expected to grow annually at a compound rate of 13.69 per cent to reach $105.6bn by 2026, Mordor Intelligence said.

Meanwhile, spending on public cloud services is expected to surge to $692.1bn in 2025 compared to $242.6bn in 2019, Gartner projects.

Investors across the world are increasingly looking at digital infrastructure assets as part of their portfolio diversification strategies.

Mubadala, which invests on behalf of the Abu Dhabi government, is at the heart of the emirate’s efforts to diversify its revenue base and generate income from sources other than oil.

The sovereign fund’s $243.4bn investment portfolio spans five continents. It has interests in aerospace, information and communications technology, semiconductors, metals and mining, renewable energy, oil and gas and petrochemicals.

In recent years, the fund has turned from legacy assets to digital investments, life sciences, and the health care and bio-medical sectors.

In June 2020, Mubadala invested $1.2bn in Reliance Industries’ Jio Platforms to buy a 1.85 per cent stake in the company, which is controlled by India’s richest entrepreneur, Mukesh Ambani.

In 2019, it invested up to $500m in data centre company Cologix along with US investment company Stonepeak Infrastructure Partners.

The fund said in December that it had agreed to divest its stake in Cologix to Stonepeak for an undisclosed sum.

PDG is a leading data centre infrastructure platform operating in an attractive market with strong tailwinds and catering to rising demand from the hyperscale segment, and more broadly Asia’s digital economies
Khaled Al Qubaisi, Mubadala chief executive of real estate and infrastructure investments

Mubadala has taken a significant minority stake in PDG and its investment decision was driven in part by the quality of the company's management and co-investors in the deal, said Mounir Barakat, head of its digital infrastructure arm.

“These were two really very important building blocks,” Mr Barakat told The National.

“With a different set of management and a different set of partners, we could have looked at it with everything [else being] the same and come up with a different conclusion.”

Established in 2017, PDG has a footprint across key Asian digital economies with a portfolio of 20 centres and more than 600MW of secured capacity across five countries.

PDG serves hyperscalers data processors, internet and cloud companies, and financial institutions.

The new funds will enable PDG to consolidate its position in Japan, India, Singapore, China and Indonesia, and quicken its expansion into other markets.

“Mubadala’s track record of long-term investments combined with extensive know-how in the digital infrastructure space makes it a great partner as we continue to scale our business,” said Rangu Salgame, chairman and chief executive of PDG.

Asia is one of the fastest growing data centre regions in the world, driven by strong market fundamentals such as a large base of internet users, the growth of digitalisation, high levels of data use and an increasing tech-savvy young population, Mubadala said.

The fund is “sitting on a portfolio of about half a dozen” digital infrastructure investments and “quite of a few of these were done in the last 12 months”, Mr Barakat said.

It is looking at more deals in its primary target markets of Canada, the US, Western Europe, the UK and South-East Asia. It is also open to sourcing deals in other markets, he said.

“We are in a sector which has significant tailwinds and every single market is underserved, so there are significant opportunities in all the markets,” Mr Barakat said.

“We are looking a number of things, but many [aspects] have to align for us to transact.”

Updated: February 22, 2022, 6:30 AM