Macquarie eyes its 1st Korean data center valued around $722 mn

Macquarie Group’s South Korean infrastructure investment arm is set to buy its first domestic data center, valued at up to 1 trillion won ($722.4 million), amid expectations of a surge in the asset price.

Korea’s largest real estate firm IGIS Asset Management Co., the developer of the new data center in the Seoul metropolitan area, has tapped Macquarie Korea Infrastructure Fund (MKIF) as the preferred bidder with Jones Lang LaSalle Inc. as the lead manager, investment banking sources said on Wednesday.

The data center’s value is estimated between 800 billion won and 1 trillion won, according to real estate industry sources. If the deal is clinched, it is expected to be a Korean real estate firm’s first development and sale of a local data center.

IGIS has invested around 400 billion won in the data center, which was built early this year with 40 megawatts of production capacity. It has 10 stories above ground and two underground with 41,919 square meters of floor area.

Some 92% of the property is leased out to Korean mobile app and tech giant Kakao Corp., while 8% is leased to LG Group’s tech service management arm LG CNS Co. The asset is located in Pungsan-dong, Hanam in Gyeonggi Province, 10 kilometers (6.2 miles) from the eastern edge of Seoul.

DEMAND SURGE EXPECTED

MKIF, the only listed infrastructure fund in Korea with a 5.44 trillion won market cap, forecasts that the values of data centers in the Seoul metropolitan area will soar due to supply challenges.

As more than 60% of around 150 data centers in Korea are located in the greater Seoul area as of the end of 2023, the government is planning to move some of the assets to other provinces to improve power distribution across the country, raising concerns that the Seoul metropolitan area will experience a shortage in digital infrastructure supply.

The main Kospi-listed fund manager has tapped data centers as one of its future growth drivers and is in talks with other potential sellers of the digital infrastructure assets, according to sources. Real asset investors including IGIS, Koramco Asset Management Co., Actis and Pacific Investment Management Co. are considering selling their data centers, sources added.

MKIF is managing 2.7 trillion won in Korean infrastructure. One of its recent deals was last December's 214.8 billion won investment in the East Seoul Underpass Project, a 12.2-kilometer dual two-lane underground expressway connecting a northern district of Seoul and its upscale Gangnam District, including 10.1 kilometers for private investment.

With further investment once the operation begins, MKIF will own 40% equity, 40% of a subordinate loan and 40% of a conditional junior subordinate loan.

The infrastructure fund also invested 183.2 billion won for a 48% stake in Daejeon-based city gas retail distributor CNCITY Energy Co. in June 2023 and injected 322.5 billion won for a 100% stake in Haeyang Energy Co., a retail gas supplier to Gwangju and South Jeolla Province, in 2021.

Write to Byeong-Hwa Ryu at hwahwa@hankyung.com

Jihyun Kim edited this article.