SINGAPORE - Two data centre units under the Keppel Corp umbrella have agreed to develop and operate a maiden project in Johor, with a targeted 2020 completion date.

The project will be undertaken by Keppel Data Centres Holding and Alpha DC Fund. Keppel Data Centres is a joint venture between Keppel Telecommunications & Transportation (T&T) and Keppel Land, both subsidiaries of Keppel Corp, with Keppel T&T holding a 70 per cent stake. Alpha DC Fund is a collaboration between Keppel Data Centres and Alpha Investment Partners, a wholly owned unit of Keppel Corp asset management arm Keppel Capital.

A special-purpose vehicle of Alpha DC Fund currently owns all the shares of the project company that is undertaking the work to build the data centre on a 261,000 square foot site in Johor. The project company has already secured a customer to fully lease the data centre upon completion.

Keppel T&T has an effective interest of about 45.7 per cent in the project company at the moment. Under the agreement, the special-purpose vehicle has a put option to require Keppel Data Centres to buy all of the shares in the project company for an amount of cash equal to the agreed property value of the project plus its net asset value less the carrying value. After the put option is exercised, Keppel T&T's stake in the project will be 70 per cent, via its interest in Keppel Data Centres.

The special-purpose vehicle has 30 months after the subleasing of the site to exercise the put option. The data centre customer also has a call option to buy back the data centre.

This will be Keppel T&T's first data centre deal with the customer, according to the filing with the Singapore Exchange.

"The proposed transaction enables the company to land the first data centre deal with the third-party customer, which strategically opens doors to develop and operate other potential projects for the third-party customer in Asia-Pacific and Europe," Keppel T&T said.