Asia-focused digital infrastructure platform Digital Halo, an affiliate of real estate investment manager Arch Capital Management, is gearing up to launch its inaugural fund.
Speaking with Infrastructure Investor, Digital Halo executive chairman Charles Cosgrove and chief investment and operating officer Kai Goh said they hoped to reach a first close for the closed-end fund in the third quarter of 2023.
They said a fair estimate for the target size of the fund was between $500 million and $1 billion, subject to prior and continuing compliance with all regulatory requirements in Singapore and any other applicable jurisdictions.
The platform was founded by Cosgrove – who is also president of Arch Capital – and Goh, and is backed by Manulife Investment Management, after the latter formed a strategic partnership with Arch Capital in early 2022 through the acquisition of a significant minority stake in the firm.
Digital Halo plans to target a range of institutional investors including sovereign wealth funds, pension funds, endowments, insurance firms and family offices in Asia, the Middle East and North America, as well as other regions.
The platform aims to invest in, develop and operate data centres, fibre networks and towers across markets in Southeast and north Asia. It has one data centre in the Philippines – a proposed 70MW campus in Manila – already in the pipeline. The asset, which is soon to start construction, is currently owned by Arch Capital Fund IV, and expected to be acquired by Digital Halo’s first fund in 2023.
In addition to the Philippines, the platform is actively exploring digital infrastructure opportunities in Indonesia and Thailand.
“When raising third party capital, it’s important to have opportunities lined up to invest in or, ideally, as we do, an actual asset in hand. [The Philippines, Thailand and Indonesia] are the three markets [where] we expect to be doing a lot of transactions, business development and hopefully land acquisition in calendar 2023,” Cosgrove said.
“There’s a lot of work to do [in the digital infra space in these markets] and this is why we think this is the right geography for us. Not only are [current] trends favouring what we’re doing, it just so happens that our ability to execute on the ground lies in those markets as well, because Arch Capital is in those markets.
“I’m pretty confident that with [our current dealflow], which marks us out as being different from a typical start-up, we will have a decent shot at having a final close [for Digital Halo’s first investment vehicle] in the second or third quarter of 2024.”
Goh said the platform’s focus on the Philippines, Thailand and Indonesia in particular stemmed from those markets being underserved from a digital infrastructure point of view, especially given their population, economic activity and expected growth.
“On the supply side, what we see is that, in terms of quality of supply, [these markets] don’t have the same level of specifications in data centres as you can find in more mature markets like Singapore [or] Tokyo,” he added. “[As a result] there is a niche where a player with the relevant international expertise can come in to help provide the right specifications that will meet requirements from international customers.”
Last year, historically real estate-focused investment firm PAG also branched out into digital infrastructure with the November 2021 launch of FLOW Digital Infrastructure.
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