Singapore-based data center developer Racks Central has secured $1 billion in investment from the China-ASEAN Investment Cooperation Fund (CAF) II to further develop data centers across Singapore, Malaysia and Indonesia.

The funds will be used for expansion along the corridor spanning Singapore; Johor, Malaysia; and Batam, Indonesia. The developments will be built for AI and hyperscale demand.

APAC real asset owner and manager ESR is acting as sub-advisor on the investment.

“We are pleased to welcome ESR and CAF II as strategic partners,” said Bobby Wee, founder and CEO, Racks Central. “Their capital commitment and infrastructure expertise will support our ambition to develop a seamless, AI‑ready data center corridor across Southeast Asia, enabling our customers to scale efficiently as regional digital demand continues to grow.”

Jeffrey Shen, co-founder and co-CEO, ESR, added: “The rapid acceleration of AI adoption and digital transformation is fundamentally reshaping data center requirements across Asia-Pacific. As sub‑advisor to CAF II, and with ESR’s data center development expertise across a pipeline of over 3 GW, we are pleased to support Racks Central’s transformation to a scalable, regional data center platform for hyperscale and enterprise customers.”

Racks Central was founded in 2014 and operates a 12MW colocation data center in Singapore.

The company is currently building an AI-ready data center campus at the Iskandar Halal Park in Johor, dubbed RCJM1. The developer broke ground on the project in December last year. It will consist of four large-scale developments with a combined capacity of up to 510MW.

Racks Central also intends to build a 95MW campus in Batam.

CAF II is a US dollar-denominated offshore multilateral cooperation fund. The fund is majority-owned by financial institutions in China and invests in Southeast Asia, specifically targeting nations belonging to the Association of Southeast Asian Nations (ASEAN).

This is part of a wider strategy by China to deepen its ties with these countries and develop its soft power on the continent.

ESR was formed in 2016 out of a merger between e-shang and Redwood Group. The company originally focused on logistics real estate but has made several investments in data centers since 2021, with 3GW in the pipeline.

ESR itself has data center developments planned in Hong Kong, Malaysia, South Korea, Japan, India, and Australia.