QST weighs options for Saudi business, including sale, amid Gulf AI boom, sources say

By Federico Maccioni

DUBAI, Feb 26 (Reuters) - Data-center company Quantum Switch Tamasuk is considering strategic options, including a sale of its Saudi business, four people with knowledge of ‌the matter told Reuters, in a deal that could attract renewed interest from global ‌buyout firms seeking a slice of the Gulf's AI boom.

QST was set up as a joint venture between Saudi Arabian ​infrastructure developer Tamasuk and UK-based data-center player Quantum Switch. It has operating projects, and planned future ones, in Saudi Arabia.

The company has appointed Rothschild to advise on any potential transaction, said the four sources, who declined to be named because the matter is not public. A deal could value the ‌business at a level significantly higher ⁠than $500 million, one of the people said. Deliberations are at an early stage and the company has not decided whether it will pursue a sale ⁠or other options, the sources said.

Its two data centers in Dammam, in the east of the kingdom, have a total capacity of 9 megawatts (MW) each, enough to power up to 9,000 homes depending on ​factors such ​as location, energy efficiency and power source.

Global private equity ​groups operating in the region had ‌shown interest in the assets that may be for sale, the people said.

QST, Tamasuk and Quantum Switch did not respond to multiple requests for comment. Rothschild declined to comment.

Saudi Arabia and other Gulf countries are pouring billions of dollars into data-center infrastructure as they strive to become global AI hubs, viewing the booming sector as a way to help diversify their economies away from hydrocarbon ‌revenue.

They are betting that abundance of land and access ​to cheap energy will lure hyperscalers that have been ​driving AI adoption, such as Alphabet's Google, ​Microsoft and Meta. Challenges remain in the region in areas including data ‌governance, access to chips and top-tier talent in ​a fiercely competitive global ​market.

Foreign investors have also been showing growing interest in regional data centers, not just in oil and gas pipelines, especially in the UAE.

Last year, KKR bought a minority stake ​in Dubai-based data-center company Gulf Data ‌Hub, while Silver Lake invested in Khazna Data Center Holding, which is involved ​in the construction of a massive data-center campus in Abu Dhabi.

(Reporting by Federico Maccioni ​in Dubai; Editing Anousha Sakoui and Matthew Lewis)