DCP, CPE make $300m China data center play

The deal is essentially a proxy for the growth of China’s data center industry. DCP noted in a statement that the industry is likely to see annual growth of 30% over the next five years, driven by rising demand from internet, cloud computing, and artificial intelligence-related businesses. Today, China’s data traffic per capita is only 13% of the US.

Founded in 2015 and headquartered in Beijing and Guangzhou, Hotwon focuses on data center design, construction and operation, drawing on the team’s networks and experience in the telecom industry. It has a pipeline of more than 80,000 cabinets in data centers located in tier-one cities. The new capital will go towards completing these projects and delivering efficient and stable services.

“As China’s data center industry continues to grow rapidly, we look forward to working closely with Hotwon’s management and fully leverage our broad industry network, operational expertise and M&A experience to help Hotwon strengthen its leadership position and achieve sustainable growth," said David Liu, executive chairman of DCP.

Asia is expected to become the largest data center market globally in the near term, with developing economies driving most of the growth. China has proven the epicenter of this theme, prompting concerns around valuations amid a flood of buy-and-build plays. One of them, Bain Capital-backed Chindata Group, raised $540 million in a US IPO in October.

Last month, CDH Investments reached the first close of RMB1.5 billion ($228 million) on a data center industry fund. The vehicle – part of the Chinese GP's mezzanine strategy – has a full target of RMB2 billion. It is also the first renminbi-denominated fund dedicated to data center investments.

DCP was established by Liu and Julian Wolhardt, who previously held leadership positions with KKR in China. A debut fund closed at $2.5 billion last year, comprising a US dollar-denominated tranche of $2 billion, plus a renminbi sidecar of $500 million.

Recent activity includes a RMB1.94 billion commitment to diabetes treatment specialist Tonghua Dongbao Pharmaceutical and a proposed $5.6 billion take-private of online recruitment services platform 51job.

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• Topics
• Greater China
• Technology
• Infrastructure
• Expansion
• China
• data center
• DCP Capital Partners
• Citic Private Equity
• Growth capital