Beyond data centre Reits: The AI potential that Singapore investors are still missing
Such trusts represent only one layer of a much larger digital infrastructure ecosystem
The article discusses the potential of Singapore investors in the AI boom that many may be overlooking. Data centre Real Estate Investment Trusts (Reits) are often considered the default way to invest in the theme, but they only represent one layer of a larger digital infrastructure ecosystem.
Keppel CEO Loh Chin Hua noted that while Singapore has several companies with AI exposure, such as landlords leasing space to hyperscalers, contractors building the infrastructure, and utilities supplying power, there is a lack of a company that covers all aspects of the AI build-out. Loh described this as being an "ecosystem player," bringing together data centres, power, connectivity, and asset management into one solution.
The economics of AI infrastructure are capital intensive, making it difficult for a single company to fund and manage all aspects of the infrastructure on its balance sheet. Keppel has capitalized on this opportunity by securing rights agreements for subsea cables, such as the Bifrost Cable System, which directly connects Singapore to the US West Coast via Indonesia. This investment has yielded an expected internal rate of return (IRR) of about 30%.
Other infrastructure components that are crucial for AI development include fibre networks, such as the nationwide fibre network operated by NetLink NBN Trust, and the physical infrastructure built and operated by companies like Keppel. These investments, while not labeled as AI stocks, play a vital role in supporting the AI boom in Singapore.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
