KKR, GIC & DigitalBridge in fray to acquire Carlyle’ Nxtra stake

Private equity giant KKR, Singapore’s sovereign wealth fund GIC Holdings Pte. Ltd, and digital infrastructure-oriented alternative asset manager DigitalBridge Group Inc are in the fray for the 24% stake. 

The deal is likely to have an enterprise value of around $700 million, the people added. The secondary minority sale deal process is being run by Bank of America. 

“The stake sale process is ongoing," said one of the two people cited above who did not want to be named. 

Carlyle through its affiliate CA Cloud Investments acquired 24% in Nxtra for $235 million or about ₹1,800 crore in 2020. While the American equity firm is selling its entire stake, Bharti Airtel continues to hold the remaining stake.

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Queries to KKR, Carlyle Group, Bharti Airtel and GIC did not elicit a response as of Tuesday evening press time. Bank of America and DigitalBridge Group declined to comment.

The Economic Times had reported on 22 February that ADIA, Stonepeak, Permira, GIC, KKR and DigitalBridge were being tapped to acquire Carlyle’s stake.

There is significant investor interest in India’s digital and physical infrastructure space. A case in point being New York-based private equity firm I Squared Capital and alternative investment firm Stonepeak vying for acquiring Vodafone Group’s 21.5% stake in Indus Towers in a deal potentially valued at around $2.3 billion as reported by Mint on Monday.

Airtel's Data Centre Business

Gurugram-based Nxtra Data Ltd, a subsidiary of India’s second largest telecom carrier that began operations in 2013, offers a large network of secure and sustainable data centres in India to leading enterprises, hyperscalers, start-ups, SMEs and governments. 

Competing in the high-demand digital infrastructure sector against companies like Yotta and NTT, Nxtra has chalked out plans to ramp up capacity. 

Competing in the high-demand digital infrastructure sector with several companies such as local player Yotta and Japan’s NTT, Nxtra claims to have the largest network of data centres in India with 12 large and 120 edge data centres across the country. 

Also read | Yotta looking to raise equity-based funding amid Nvidia spotlight

The company has chalked out plans to ramp up capacity and is investing ₹5,000 crore in seven new facilities in Mumbai, Pune, Kolkata, Bengaluru, Hyderabad and Delhi to double its current current 200MW capacity to 400MW by 2025.

NTT executives told Mint last year that it intends to add eight new data centres that were under construction and was expanding its existing 14 centres in 15 cities across the country. Yotta Data Services is also expanding its data centre in Greater Noida, while also commencing work on an ‘edge’ data centre in Guwahati, Mint reported in December.

The Data Centre Boom

With artificial intelligence (AI) and generative AI (GenAI) deployment rising in enterprises, the compute capacity required will rise exponentially, leading to massive growth in data centre requirements especially in markets like India and US, leading to a significant upside in revenues from these markets in the coming years.

According to report by real estate consulting firm CBRE South Asia, India’s data centre capacity is expected to cross 1,300 MW by the end of 2024 from 880 MW as of June 2023, with nearly 500 MW currently under construction. 

Also read | Investors keep the faith in Indian social startups, eye GenAI models

Mumbai, Chennai, and Bangalore will collectively dominate the data centre stock with an 80% share by the end of 2024, according to CBRE. The report added that the local data centre industry was witnessing a continuous uptrend owing to rapid digitalisation, enhancement of tech infrastructure and the inclusion of advanced technologies such as 5G, AI, blockchain and cloud computing.

Financial services advisory firm Avendus Capital pegged $23 billion investments towards capex on data centres over the next 10 years, in a report in June 2023, driven by the exponential increase in data consumption, storage, governmental thrust on data localisation besides the need for high bandwidth following the launch of 5G services by telecom service providers.

Besides commercial requirements, the government is also pushing for data localization under provisions of the Digital Personal Data Protection (DPDP) Act, which has necessitated the need for data centres.

The Centre also laid out plans to implement a policy to encourage firms to build data centre parks, including providing infrastructure status, which will help them access benefits such as long-term credit at easier terms.