Blackstone invests $150m in China's 21Vianet

It will make Blackstone one of 21Vianet’s largest institutional shareholders, according to a release. The stock has gained 25% since confirmation of the investment, closing at $21.52 on June 22 to give the company a market capitalization of about $2.4 billion.

Blackstone has subscribed for preferred shares with a conversion price of $17 that will bear a dividend rate of 4.5% and rank senior to 21Vianet’s ordinary shares in liquidation. The investor will have observer rights on the board subject to maintaining an as yet unspecified ownership percentage threshold. 

21Vianet claims to be China’s leading carrier-neutral and cloud-neutral data center services provider. It offers internet and cloud services as well as business VPN access to some 5,000 government and enterprise customers in more than 20 cities.

Last month, the company appointed Samuel Shen, formerly president of JD Cloud, as executive chairman of its retail internet services business. He is expected to support a recent expansion drive into the hyperscale market, a subset of the data center space focused on maintaining the flexibility to increase capacity as demand rises. 

21Vianet is currently developing a number of projects with Alibaba Group, which has been identified as having significant appetite for large-scale and hyperscale infrastructure in light of rising domestic demand for dedicated server hosting services. Other customers include Microsoft, JD Cloud, Tencent Cloud, and Huawei Technologies.

In 2016, 21Vianet teamed up with Warburg Pincus to develop a portfolio of turnkey data centers. This agreement was restructured last year to include the participation of Princeton Digital Group, a Singapore-based portfolio company of Warburg Pincus that is pursuing a data center expansion in China. 

“China’s public cloud is experiencing exponential growth and 21Vianet is positioned to meaningfully accelerate its deployment of data center capacity,” said Jasvinder Khaira, a senior managing director in Blackstone’s tactical opportunities division.

21Vianet’s revenue grew 11.4% last year to RMB3.8 billion ($535.5 million), while its net loss narrowed from RMB187 million to RMB181 million. Capital expenditures, including property purchases and construction costs, came to about RMB1.3 billion in 2019. This figure is expected to increase to RMB2.4-2.8 billion in 2020.

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