KKR to Invest in Middle East’s Biggest Data Center FirmKKR to Invest in Middle East’s Biggest Data Center Firm

(Bloomberg) -- KKR & Co. is set to buy a stake in one of the Middle East’s largest data center firms as the energy-rich region emerges as a top investment destination for global funds and as demand for digital infrastructure skyrockets.  

The US alternative asset manager is making the investment in Gulf Data Hub through its global infrastructure strategy, according to a statement. Financial details weren’t disclosed but the firms have earmarked $5 billion to grow the Emirati firm regionally and internationally. 

KKR said last year that increasing demand for data centers to support artificial intelligence and cloud computing will boost global spending in the sector to $250 billion annually. KKR and peers such as Blackstone and Brookfield Asset Management. have been aggressively deploying cash in the data infrastructure space in recent years.

Gulf Data Hub was established in 2012 and is headquartered in Dubai, the Persian Gulf hub which in recent years implemented plans to increase the share of the digital economy’s contribution to its gross domestic product. The firm owns seven data centers in the United Arab Emirates and Saudi Arabia, with more planned in other Gulf countries.

The Gulf Data Hub deal marks one of the larger international investments into a homegrown business in the UAE. Uber Technologies, Amazon, and, more recently, TJ Maxx’s owner have all snapped up assets in the country in recent years. KKR, which has offices in Dubai and Riyadh, previously invested in the oil pipelines of Abu Dhabi’s national oil company and acquired planes from the emirate’s flagship carrier.   

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The Persian Gulf, thanks to its vast energy reserves and large pools of capital, increasingly makes for an attractive choice for international investment firms. Hedge funds, private equity firms, investment banks, and family offices have all been expanding their presence in regional financial centers including Abu Dhabi and Riyadh.  

The region’s access to cheap energy and its location on the crossroads between continents are seen as additional advantages In the Gulf region, competition between the UAE and Saudi Arabia to become the premier hub for artificial intelligence has kicked off a race to build data centers to support the technology. 

The Middle East “is today one of the most attractive investment destinations for long-term capital,” said Tara Davies, Co-Head of KKR EMEA and Co-Head of European Infrastructure.

KKR set up its global infrastructure team and strategy in 2008 and its portfolio of such assets was worth about $77 billion as of September 30. It has invested more than $29 billion across 22 investments in relevant digital infrastructure companies across data centers and fiber, as well as $15 billion in power, utilities, and energy.

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