CPE, GDS team up on China data center project

They will pursue the project on a joint venture basis with CPE and GDS owning 42% and 58%, respectively. CPE is making the investment through CPE Fund, a vehicle said to be managed by data center experts. GDS is a US-listed data center developer focused on the China market.

The JV has taken an 82% interest in a project development company called Tenglong IOT (Beijing) Data Technology with a view to buying out the remaining 18% upon completion of construction among other conditions. The planned Beijing-area data center is called BJ13.

BJ13 will be 27 kilometers from an existing project cluster controlled by GDS in Yizhuang district. GDS said in a release that it expects BJ13 to be highly marketable and that it has received strong interest from an existing hyperscale customer to take all of the capacity.

Tenglong IOT used proceeds from the JV investment to acquire 88% of a company that owns the land-use rights for the BJ13 site and plans to eventually acquire the remaining 12%. Based on its preliminary designs, BJ13 will have a net floor area of 21,000 square kilometers and an unusually high power density of more than 3 kilowatts per square meter.

GDS will assume responsibility for construction on a turnkey basis, with the project expected to be completed in mid-2023. Upon completion and satisfaction of certain other conditions, GDS will acquire CPE's equity interest in the JV.

GDS positions itself as the leading operator of its kind in China with almost 640 local technology companies as customers. It raised $192 million in a US IPO in late 2016. The company's stock closed at $80.05 on July 23 - a slight increase on the previous day - giving the company a market capitalization of around $12.8 billion. GDS has more than doubled in size in the past 12 months.

Last month, the company received $400 million from Hillhouse Capital and $105 million from ST Telemedia Global Data Centers, with the investors acquiring 3.9% and 1.2% stakes, respectively. This took ST Telemedia’s position to 34.2%. SBCVC, a Chinese venture capital arm of SoftBank, was an early investor and held a 3% stake as of February, down from 7% in January 2019.

Last year, GDS entered a JV with GIC Private, whereby the Singapore sovereign wealth fund would acquire 90% equity interests in built-to-suit data centers in lower-tier cities across China from GDS, which will develop the projects as 100% owner during the construction phase. GDS will act as operator and retain its 10% stake in each project.

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• Topics
• Greater China
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• China
• Citic Private Equity
• data center