Bain agrees $3.1b Chindata take-private

The private equity firm will pay the equivalent of USD 8.60 per American Depository Share (ADS), according to a filing. This represents a 42.6% to Chindata’s closing price on June 5, the day before Bain made its first approach. Chindata’s stock closed at USD 8.11 on August 11 – giving the company a market capitalisation of USD 2.97bn – although it climbed significantly in after-hours trading.

Bain revised its initial bid upwards from USD 8.00 per share after China Merchants Capital, which describes itself as one of Asia’s largest alternative asset management firms with over USD 40bn in assets under management, entered the fray with an all-cash offer of USD 9.20 per share in mid-July.

Having assembled Chindata through a buy-and-build, Bain retained a 42% stake in the company post-IPO and held 87% of the total voting power by virtue of the dual-class share structure. It responded to China Merchants Capital’s bid by informing Chindata that it would neither sell any shares in the company to a third party nor pursue any alternative transaction.

The private equity firm has since won support from other investors, leaving it with nearly two-thirds of the outstanding shares and 95% of the voting power. The transaction will be funded through a combination of cash, debt financing from onshore Chinese lenders Shanghai Pudong Development Bank and Industrial Bank, and rollover equity from existing shareholders.

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. Several other investors contributed capital along the way, including Dutch pension fund manager APG Asset Management and Korean conglomerate SK Group.

Chindata raised USD 540m through a NASDAQ IPO in October 2020, pricing its shares at USD 13.50 apiece. The stock peaked at USD 24.00 at the end of 2020, but it ended 2021 below USD 7.00

The company 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.

TikTok, a social media platform controlled by China's ByteDance, was responsible 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
• South Asia
• Southeast Asia
• Infrastructure
• Technology
• Buyouts
• China
• data center
• Bain Capital Asia