China Merchants Capital moves for Bain target Chindata

Bain assembled Chindata through a buy-and-build and took the business public in October 2020. Last month, the private equity firm – which still holds a 42% stake in the company and has 87% of the total voting power by virtue of the dual-class share structure – launched a take-private bid of USD 8.00 per American Depository Share (ADS).

China Merchants Capital, which describes itself as one of Asia’s largest alternative asset management firms with over USD 40bn in assets under management, is offering USD 9.20 per ADS. This represents a 52.6% premium to the June 5 closing price, according to a statement.

Chindata’s stock peaked at USD 24.00 at the end of 2020 and has since fallen substantially, ending June 6 at USD 6.28. The stock spiked in response to Bain’s bid, closing at USD 7.24 on June 8, and it jumped again with the arrival of China Merchants Capital, closing at USD 8.13 on July 10. The company now has a market capitalisation of approximately USD 3.02bn.

Bain built the Chindata platform by acquiring a majority stake in the data centre division of China’s NetScience Technology for CNY 990m (USD 147m) in 2019 and combining it with Bridge Data Centers, a Southeast Asia and India-focused player. The company raised USD 540m through a NASDAQ IPO, pricing its shares USD 13.50 apiece.

At the time of the offering, Dutch pension fund manager APG Asset Management and Korean conglomerate SK Group were large external investors in the company, as well as Bain.

Chindata claims to be the largest player in emerging Asia's carrier-neutral hyperscale data centre industry by capacity in service. As of March, it had 898 megawatts of total capacity across 33 data centres. Utilised capacity was 537 MW.

The company relied on TikTok, a social media platform controlled by China's ByteDance, for 86% of revenue in 2022. US lawmakers are seeking to ban TikTok amid natural security concerns and escalating tensions with China.

While all Chindata’s business operations that involve ByteDance are in China and Malaysia, the company acknowledged in its most recent annual filing that its products and services would be subject to ByteDance-related restrictions. This could lead to the cancellation of projects or a reduction in the volume of business from ByteDance, which would severely impact profitability.

Revenue came to CNY 4.55bn in the 2022 financial year, up from CNY 2.85bn in 2021. Over the same period, net profit rose from CNY 316.4m to CNY 651.6m.

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• Topics
• Greater China
• Technology
• Infrastructure
• Buyouts
• China
• China Merchants Capital
• Bain Capital Asia
• data center