Singapore’s PDG Seeks $1.2 Billion Loan for Malaysia Data Center

Asian data center operator Princeton Digital Group Ltd. is seeking a syndicated loan of up to $1.2 billion to fund its Malaysia buildout, according to a person familiar with the matter, as the debt binge to finance artificial intelligence infrastructure continues.

HSBC Holdings Plc Singapore branch, Maybank Investment Bank Berhad, OCBC Bank (Malaysia) Berhad, Standard Chartered Bank (Singapore) Ltd., and United Overseas Bank Ltd. are the mandated lead arrangers and bookrunners for the three-year loan deal, said the person, asking not to be identified discussing private information.

Proceeds from the loan to be taken by the company’s subsidiary, Princeton Digital Group Labuan Alpha Ltd., will be used to fund a 198.8-megawatt data center campus project in Johor, Malaysia and to refinance existing debt, the person said.

Standard Chartered declined to comment. Representatives for Princeton Digital Group, HSBC, Maybank, OCBC Malaysia and UOB didn’t immediately respond to requests for comment.

Data center companies across the world have been taking on debt as they seek to raise capital to meet growing AI demand. Moody’s Ratings expects at least $3 trillion to flow into data center-related investments over the next five years, with much of the spending financed through debt.

But there are signs global investors are starting to push back against what they see are frothy AI valuations as evidenced by the collapse of Nvidia Corp.-backed data center operator Firmus Grid Ltd.’s initial public offering last week.

Read More: Firmus IPO Debacle Raises the Bar for Asia AI Deals in Pipeline

Data center firm AirTrunk, which counts Blackstone Inc. as a key investor, was reported to delay its planned IPO of a real estate investment trust in Singapore until next year as higher interest rates and market volatility temper investor demand.

Headquartered in Singapore, Princeton Digital’s top shareholder is Warburg Pincus and other investors include Stonepeak Partners, Abu Dhabi sovereign fund Mubadala Investment Co. and Ontario Teachers’ Pension Plan Board.

The firm, founded in 2018, operates more than 1.8 gigawatts of data center capacity across Asia including China, Japan, South Korea, India, Singapore, Malaysia and Indonesia, according to its website.

PDG has been on a borrowing spree as it seeks to expand across Asia. In May, the firm said it raised around $856 million for its data center buildout in Indonesia. Earlier in the year, the company said it was targeting to raise $5 billion in debt to support regional expansion plans.