DUBAI: UAE telecoms group e& said on Wednesday that it had agreed to sell its 40% stake in Khazna Data Center Holdings for $2.2 billion, as part of a deal struck with artificial intelligence company G42.

The telecoms company's statement said the deal will generate a capital gain of $1.4 billion before federal royalty and corporate tax and that proceeds will be used to reduce its debt.

Khazna, which designs, builds and operates wholesale data centers, said separately that MGX and Silver Lake would become minority investors in addition to majority shareholder G42.

It added that the deal was expected to be completed by the end of the first quarter.

The UAE, a wealthy oil producer, is pouring billions of dollars into AI in a bet to boost its global clout long after oil demand has dried up.

Its efforts are spearheaded by the state-backed G42 and MGX, in which the $330 billion wealth fund Mubadala is a partner.

The 40% stake in Khazna, which says it has 30 operational data centers and more under construction, was acquired by e& in 2022.

e& said in it statement that it would remain a strategic partner "and a major tenant" of Khazna.

Shares of e& listed on the Abu Dhabi exchange are up 2.8% this year. (Reporting by Federico Maccioni Editing by David Goodman and Deepa Babington)