Hong Kong-based real estate private equity firm Gaw Capital Partners announced on Friday that a fund under its management has formed a joint venture partnership with Chinese internet data centre (IDC) developer Centrin Data, to acquire, develop and operate a portfolio of hyper-scale IDC projects in China.
Under the partnership, Gaw Capital will provide expertise in investment underwriting and transaction structuring, project development and management, project financing, corporate governance and capital markets to support future operations.
Centrin Data, founded in 2005 as a Chinese national high-tech enterprise, will focus on site sourcing, IDC design, leasing, operation and financing of the data centre, as well as customer service for clients including government entities, conglomerates and internet companies.
Centrin Data mainly serves the government and companies in the TMT, banking and insurance sectors. It has four IDC projects in China, which collectively host over 20,000 operational data centre racks with a further 55,000 racks under construction in the pipeline.
As part of the partnership, Gaw Capital is raising an IDC fund for investment opportunities in China.
“The launch of this new fund reflects increasing investor demand for data centre assets in China, thanks to technological advancements in 5G communications, 4K transmission, the internet of things (IoT) and artificial intelligence (AI),” said Gaw Capital in a statement.
“There is an ever-growing amount of data traffic that is driving demand for data centres to consolidate servers, store data and manage network support,” the company added.
The first seed project is the Huaqiao Project located in Kunshan city, Jiangsu province, which is a southeastern China’s coastal region north of Shanghai. The project is directly linked to Shanghai’s national level internet exchange point, which enables superior network connectivity with low latency time.
The project consists of two phases with a gross floor area (GFA) of 300,000 square metres in total. Phase I is currently occupied by a top-tier internet company with 6,400 data centre racks available. In Phase II, no less than 25,600 racks will be offered to the potential customers upon its completion in the early 2020s.
“The launch of the new data centre fund reflects our confidence in data centre assets in China. High barriers to entry and demand-supply imbalance makes IDCs near tier-one cities a very scarce asset,” said Humbert Pang, managing principal and head of China for Gaw Capital Partners, in the statement.
“In China, there is an abundant supply of data centres in relatively remote areas, but most of the demand comes from tier-one and tier-two cities along China’s eastern coastal line. Geographical demand and supply imbalance make IDCs near tier-1 cities a valuable asset with stable rental income,” said Pang.
Gaw Capital, which specializes in real estate investments in Greater China and worldwide, has so far raised six commingled funds targeting the Greater China and APAC regions. The company has garnered equity of $16.5 billion since 2005 and commands assets of $23 billion under management as of the second quarter of 2019.
The company told DealStreetAsia in June 2019 that it has gathered $3 billion for the sixth Asia opportunity real estate fund, although the vehicle was yet to achieve the final close.