A consortium comprising private equity giant KKR, telecommunications firm Singtel, and India's Tata Group is reportedly exploring the sale of STT Global Data Centres India (STT GDC India). The proposed transaction is expected to fetch at least $5 billion, making it one of the largest data center deals in the country.
According to reports, the sale is part of a dual-track process initiated by the shareholders to rebalance capital requirements and streamline the Tata Group's broader data center strategies. This move comes amidst a significant global surge in demand for data center capacity, primarily fueled by hyperscalers and expanding infrastructure providers.
India's Growing Data Centre Market
STT GDC India currently operates a substantial network of 34 data centers spread across 10 cities, boasting a total capacity of 613 MW. This robust infrastructure positions it as a key player in India's rapidly expanding digital economy.
The shareholders have appointed advisors to facilitate the sale, reaching out to a diverse group of potential buyers. This includes global entities already operating in India or considering market entry, large domestic conglomerates, and various financial investors such as infrastructure-focused funds and private equity firms.
Strategic Shifts and Tata's Future Plans
While the sale process is underway, the shareholders had also previously evaluated an Indian initial public offering (IPO) around July, with an estimated business valuation between $6 billion and $7 billion at that time. Sources indicate that the current $5 billion target for a direct sale is slightly below the potential IPO valuation.
The Tata Group, a significant stakeholder, has separately decided to pursue its future data center ambitions through an independent platform. This new initiative involves collaborations with TPG and the group's flagship IT services company, Tata Consultancy Services (TCS).
STT Telemedia initially entered the Indian market in 2016 by acquiring a controlling 74% stake in Tata Communications’ data center business, which then comprised 14 data centers. Tata Communications retained the remaining 26% share in the joint venture. In September 2024, Tata Communications announced a substantial investment commitment of Rs 26,000 crore to add 550 MW of capacity over the next five to six years, underscoring the strategic importance of data infrastructure in the region.