Bain's Asia data center platform seeks US listing

The platform was built by Bain Capital. The private equity firm acquired a majority stake in the data center division of China’s NetScience Technology for RMB990 million ($147 million) last year and then combined the business with Bridge Data Centers, a Southeast Asia and India-focused player.

As of June, Chindata had 196 megawatts of capacity across nine data centers – eight in China and one in Malaysia. A further six facilities, representing 234 MW, are under construction. Hyperscale data centers account for 180 MW of the company’s existing capacity. At the end of 2019, the carrier-neutral hyperscale total for the whole of emerging Asia was 829 MW.

About 90% of Chidata’s current capacity is in China, almost all of it in the greater Beijing area. “We tend to focus on a little bit outside a tier-one city and build much larger scale data centers, which are much more cost-effective,” Drew Chen, a managing director at Bain, told AVCJ last month. “Usually it's a bit cooler than within the city; you spend less on power and energy supply.”

This is not only a reflection of land availability and building restrictions, but also the nature of the customer base. Industry participants note that data center providers targeting retail customers – financial institutions, governments, and large corporates – tend to favor more central locations while those serving the wholesale market – principally internet giants – are usually found on the outskirts.

Chindata’s customers are primarily cloud providers. The company currently derives most of its revenue from two: ByteDance, which is best known as the parent company of short video platforms TikTok and Douyin but making a move into cloud computing; and Wangsu Science & Technology – otherwise known as NetScience Technology – the content delivery network that previously owned of Chindata’s China centers. They accounted for 68.2% and 11.1% of revenue, respectively, in 2019.

The company offers end-to-end project management and operations, leveraging its in-house planning, design, construction, and maintenance capabilities. Its construction cost for capacity in service was $3.6 million per MW in 2019, approximately half the global industry average for data centers with a capacity of 20 MW or more. There is a strong focus on original design manufacturing (ODM), with Chen saying, “We do a lot of built-to-suit (BTS). That's increasingly more common.”

Bain owns 57.17% of Chindata, according to a prospectus. Dutch pension fund manager APG Asset Management has 10.43% and Korean conglomerate SK Group has 8.94%.

ByteDance recorded revenue of RMB853 million in 2019, up from RMB98.5 million a year earlier. Over the same period, adjusted EBITDA rose from RMB20.2 million to RMB297.5 million, while the company’s net loss widened from RMB138.2 million to RMB169.7 million. For the first six months of 2020, revenue was RMB810.6 million, with adjusted EBITDA of RMB384.8 million and a net loss of RMB59.4 million.

Frost & Sullivan projects that the carrier-neutral hyperscale data center market in Asia Pacific emerging markets will have 3,937 MW in capacity by 2024, with 3,212 MW of that located in China. The adoption of 5G networks, the development of the internet of things and artificial intelligence solutions, and an increasing reliance on cloud service providers will be the key drivers.

While telecom companies are China’s largest data center operators, accounting for 65% of the market, independent players are growing quickly. Private equity investors are keen to support these scaling up efforts, with internet companies the primary target customers.

Several GPs have chosen to work with existing data center providers, with Hillhouse Capital committing $400 million to GDS Holdings, The Blackstone Group putting $150 million into 21Vianet, and CPE – formerly CITIC Private Equity – launching a greenfield project with GDS. Others are backing more nascent operators, such as Princeton Digital Group (PDG), a pan-Asian platform supported by Warburg Pincus.

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• Topics
• Greater China
• Technology
• Infrastructure
• IPO
• South Asia
• Southeast Asia
• China
• Malaysia
• India
• Asia
• data center
• Bain Capital Asia
• APG