GDS Holdings Limited, a Nasdaq-listed developer and operator of data centres in China, is raising $505 million from private equity firm Hillhouse Capital and ST Telemedia Global Data Centres (STT GDC).
The Shanghai-based company will raise the capital through a private placement of newly issued Class A ordinary shares priced at $65 apiece. Hillhouse will subscribe to shares worth $400 million, while STT GDC plans to invest $105 million.
The amount represents about 5.1 per cent of GDS’s total outstanding shares, according to a statement. The transaction, which is expected to complete in the next few days, will see Hillhouse hold a 3.9 per cent stake in GDS, while STT GDC will own approximately 34.2 per cent.
The proceeds will be used to finance GDS’s new data centre development and potential acquisitions, and for other general corporate purposes.
GDS was established in 2001 to develop and operate data centres in major Chinese cities, including Beijing, Guangzhou and Shanghai. The company serves about 640 large and medium-sized enterprises primarily in the fields of internet, cloud computing, and financial services.
The investment comes as new IT infrastructure development in China is increasing, said William Huang, chairman and CEO of GDS, in the statement.
New IT infrastructure, which consists of 5G, AI, industrial internet, and internet of things (IoT), is poised to enjoy accelerated development in China as Beijing steps up its efforts to shore up the national economy.
China-based GDS is mulling a secondary listing in Hong Kong that could raise about $1 billion as early as this year, according to a Bloomberg report, citing people with knowledge of the matter.
If GDS were to proceed with the secondary listing in Hong Kong, the company will follow the footprints of its US-listed domestic counterparts, including China’s largest gaming firm NetEase, e-commerce major JD.com, and Alibaba, which floated the $13 billion blockbuster deal in the Asian financial hub in 2019.
The Bloomberg report said that GDS is in talks with investment banks on the potential offering. Deliberations are preliminary and both the timing and size of the deal could change.