Asian Engineering Firms are Hot Property Amid Data Center Building Boom

Key Takeaways

• To meet the rising demand for cloud services in the region, countries including Malaysia and Thailand are accelerating data center development.
• The region’s data center building boom has caught the attention of investors.
• Specialist engineering firms are increasingly targeted for mergers and acquisitions (M&A).

Regional engineering firms with expertise in building data centers are among the biggest beneficiaries of Southeast Asia’s soaring digital infrastructure investments.

In Singapore, Thailand and Malaysia especially, a data center building boom has made such firms a target for mergers and acquisitions (M&A).

Southeast Asia’s Data Center Building Boom

Compared to Europe and America, Southeast Asia’s data center market remains undeveloped.

Until recently, global cloud providers operated almost exclusively out of a single cluster of data centers in Singapore, which served the entire region.

However, when the city-state placed a three-year moratorium on new data center developments in 2019, providers started to look for additional capacity elsewhere.

Emerging hubs in Malaysia and Thailand have attracted the attention of Chinese and American cloud giants, which are investing billions of dollars into the region.

Meanwhile, since lifting the ban on new developments in 2022, Singapore has moved to build an additional 300MW capacity as part of its “Green Data Center Roadmap.”

Specialist Engineering Firms in High Demand

With dozens of data center construction projects underway across Southeast Asia, engineering firms with relevant expertise are in high demand.

Global companies like Arup and AECOM play a key role and major data center projects often bring together international designers, architects and engineers.

But navigating local regulatory and business environments inevitably requires boots on the ground. And local players also benefit from the region’s rapidly accelerating digital infrastructure development.

M&A Deals Target Local Expertise

In recent years, major investors have moved to capitalize on the building boom by acquiring local engineering specialists.

Most recently, TECO snapped up an 80% stake in NCL Energy, a Malaysian firm that specializes in industrial energy, cooling and ventilation systems.

The deal will enable TECO “to provide comprehensive MEP (Mechanical, Electrical, and Plumbing) engineering services for international cloud computing clients in Malaysia,” the firm said in a press release .

Other similar companies targeted for M&A include Malaysia’s CHT International and Maverick United Consulting Engineers, and Singapore’s RCS Engineering.