Data center REIT debuts in Singapore's biggest IPO in years

Valued at US$773 million, the trust NTT DC REIT is backed by the city's sovereign wealth fund and Japan's NTT group.

It is expected to give a much-needed boost to the Singapore Exchange (SGX), which has seen lackluster interest for major listings in recent years.

Data centers are an area of phenomenal growth owing to the global need to store massive amounts of digital data and run energy-intensive artificial intelligence tools.

NTT DC REIT closed at its offer price of $1.0 per unit on the SGX, after opening at $1.02 and rising to as much as 1.03 after trading began.

It was the biggest listing on the exchange since 2017, when fiber network-centered NetLink NBN Trust raised S$2.3 billion (US$1.8 billion).

NTT DC REIT is backed by Singapore's GIC, one of the world's biggest sovereign wealth funds, and Japan's telecommunications giant NTT Group.

The NTT Group, through its global data center business NTT GDC, is the world's third-largest data center provider, according to the IPO's prospectus.

It has a portfolio of six data centers in Singapore, Austria and the United States valued at $1.6 billion.

Singapore is a leading hub for data centers in Asia, with its strategic location at the crossroads of submarine cable routes providing connectivity to the region and beyond.

From 2024 to 2027, the power used by data centers is expected to rise at a compounded annual growth rate of 27.5%, following double-digit expansion over the past five years, the prospectus said.

Song Seng Wun, economic advisor at financial services firm CGS International Singapore, said the offer allows investors to ride on the artificial intelligence (AI) boom to diversify their assets.

"Demand for data centers is a straightforward proposition because of the demand generated by AI and everyday use of technology," said Song.

It is a "less risky investment" compared to assets that are more vulnerable to geopolitical developments and the changing tariff landscape, he told AFP.

The listing is also a "feather in the cap of SGX which has been playing second fiddle to Hong Kong for a while now," he said.