The ongoing artificial intelligence boom is expected to trigger a surge in data center investments in the Asia-Pacific region, with the total value of mergers and acquisitions and investments projected to reach billions of dollars.

What Happened: Global private equity investors and asset managers are gearing up for a wave of M&A and investments related to data centers in Asia-Pacific. The region's increasing demand for digital infrastructure, driven by the AI boom, is the primary driver of this trend, Reuters reported on Wednesday.

Asia-Pacific, including Japan, has been leading the global data center market in terms of M&A activity, with a total value of $840.47 million this year, accounting for more than half of the global total. In 2023, the region's data center deals reached a record high of $3.45 billion, a figure that is expected to be surpassed this year with several large transactions in the pipeline.

Blackstone Inc and other financial sponsors are reportedly looking to acquire AirTrunk, a company that operates 11 hyperscale data centers in Australia and the broader region. Sources close to the deal revealed this information to Reuters.

AirTrunk's owners, Macquarie Group and Canada's Public Sector Pension Investment Board, are reportedly looking to value the business at up to A$15 billion ($9.8 billion), potentially making it Asia's largest data center transaction this year.

"The AI revolution is creating an unprecedented wall of demand for high quality data centre capacity. The new capacity that needs to be built in Asia Pacific in the next three to five years is simply mind blowing. My expectation is that deal flow in the data centre space will intensify in 2024," said Garren Cronin, managing director of Cadence Advisory.

Why It Matters: The surge in data center investments in Asia follows a similar trend to that seen in the U.S. and Europe, with tech giants like Microsoft Corp (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL), and Meta Platforms Inc (NASDAQ:META) rapidly expanding their AI capabilities.

Microsoft recently announced a $2.2 billion investment in Malaysia to expand its cloud and AI services across Asia. This move is part of a broader trend of tech giants betting big on AI in Asia, with Microsoft also committing $1.7 billion to Indonesia's cloud services and AI over the next four years.

Meanwhile, in the mid of an escalating U.S.-China tech war, Malaysia has emerged as a significant hub for semiconductor manufacturing, attracting major global players. This has further bolstered the region's tech infrastructure and positioned it as a key player in the global tech industry.

Image Via Shutterstock