Nasdaq-listed Chinese data centre service provider 21Vianet Group on Monday announced it has bagged a $150 million investment from funds managed by private equity firm Blackstone.
The investment will make Blackstone one of the largest institutional shareholders in 21Vianet, which provides hosting and related services, including cloud services and business VPN services.
As part of the transaction, Blackstone will subscribe to newly issued Series A perpetual preferred shares of 21Vianet worth $150 million. These shares are convertible into the Nasdaq-listed firm’s American Depositary Shares at a conversion price of $17 per ADS, or into Class A ordinary shares at a corresponding conversion price.
The conversion price represents a premium of 11 per cent to the volume-weighted average price of ADSs for the 30 trading days immediately preceding the signing date, subject to customary anti-dilution adjustments.
In its statement, 21Vianet said the investment from Blackstone will further strengthen its balance sheet and help reinforce its position in China’s hyper-growth data centre market.
“Blackstone’s experience, connections and knowledge of the data center sector globally will help us embrace new infrastructure and digital transformation opportunities to better serve our customers,” said Josh Chen, Founder and Executive Chairman, 21Vianet.
“Josh and the management team have successfully built 21Vianet into one of China’s leading internet data center operators,” said Kishore Moorjani, Senior Managing Director and Asia Head of Tactical Opportunities at Blackstone.
21Vianet operates in more than 20 cities across China and claims to cater to nearly 5,000 hosting and related enterprise customers ranging from internet companies to government entities. It generated net revenue of 1.09 billion yuan ($154.1 million) in the first quarter of 2020, up 25.1 per cent from the same period in 2019. It expects net revenue for the full year 2020 to be in the range of 4.6 billion yuan ($650 million) to 4.8 billion yuan ($678 million).
21Vianet had in 2016 raised $388 million from state-owned Tus-Holdings in return for a 21 per cent stake. Singapore’s state-owned investment firm Temasek, Xiaomi Corporation and software player Kingsoft had invested $292 million in the company in 2014. Other 21Vianet backers include IDG Capital, Matrix Partners China, GGV Capital and CBC Capital.
China expects its new infrastructure initiative focused on artificial intelligence, industrial internet and the Internet of Things (IoT) to generate more than $2 trillion in investment over the next five years. Several large companies have already announced big-ticket investments to spruce up their high-tech presence.
Chinese tech giant Tencent will invest 500 billion yuan ($70 billion) over the next five years in technology infrastructure while Alibaba will pour 200 billion yuan ($28 million) in its cloud infrastructure in the next three years.