Global investment firm KKR (NYSE:KKR) is eying the lucrative Southeast Asia data center market. To capitalize on this growing segment, KKR announced that it would acquire a 20% stake in Singtel’s regional data center business for $800 million. Singapore-based Singtel is Asia’s leading communications technology company.
KKR is betting on Southeast Asia’s infrastructure and data center market as it expects the demand to outpace supply amid the rapid adoption of generative AI (Artificial Intelligence) and the transition of enterprises toward the cloud. The firm believes that generative AI will accelerate demand for GPU-powered data centers and expects Southeast Asia’s data center market to increase by 17% over the next five years. In comparison, the rest of the world is forecasted to increase by 12% during the same period.
KKR expects to complete the transaction by the fourth quarter of 2023. Moreover, it can increase its stake in Singtel’s regional data center business to 25% by 2027 at the pre-agreed valuation.
The acquisition of Singtel’s regional data center business is part of KKR’s Asia infrastructure strategy. Earlier, it invested in Pinnacle Towers, a digital infrastructure platform in Asia. Further, it has a stake in clean and renewable energy platforms like First Gen and Aster Renewable Energy. Globally, KKR has invested in CyrusOne, Global Technical Realty, and CoolIT Systems to capitalize on the attractive data center market.
KKR aims to generate attractive investment returns with its focus on sectors and regions poised to deliver high growth. Against this backdrop, let’s zoom in on analysts’ recommendations for KKR stock.
Is KKR Stock a Buy or Sell?
Wall Street analysts are bullish about KKR’s prospects, validating its investment strategy. With 12 Buys and one Hold recommendation, KKR stock sports a Strong Buy consensus rating. Meanwhile, analysts’ average 12-month price target of $74 implies 14.91% upside potential from current levels.
