China’s GDS to Raise $587M From Private Equity for International Data Centres

Data centre developer and operator GDS Holdings on Tuesday announced the signing of agreements to raise $587 million from private equity investors to fund the expansion of the Shanghai-based firm’s DigitalLand international business.

Investors in the Series A convertible preferred shares include Chinese private equity major Hillhouse and its real assets arm Rava Partners, as well as Boyu, Princeville Capital and Tekne Capital, GDS said in a release. On a pro forma basis, DigitalLand will have paid-up share capital of $1 billion and won’t need further intercompany funding from GDS, it said.

Also known as GDS International, DigitalLand was founded in 2022 with its corporate headquarters in Singapore. Its portfolio comprises 330 megawatts of data centre capacity in service and under construction and a further 340MW held for future development in Hong Kong, Singapore, Malaysia and Indonesia.

“I am delighted to announce this landmark capital raising which is a big step forward in our strategy to obtain dedicated financing for the development of our international business on a standalone basis,” said GDS chairman and CEO William Huang. “Within a short period of time, we have established market-leading positions in the major hub markets of Hong Kong and Singapore-Johor-Batam. We see tremendous opportunities for growth in these markets as well as in other new markets which we are currently evaluating.”

Khoo to Lead DigitalLand

Also Tuesday, GDS introduced Jamie Khoo as the chief executive of DigitalLand. Khoo joined the GDS senior management team in 2014 as deputy chief financial officer and has served as the chief operating officer of the company since January 2019.

Her appointment as DigitalLand CEO will take effect upon the closing of the Series A capital raise.

“Jamie has been an invaluable member of the GDS executive team, and I deeply appreciate her hard work and contribution over the past years,” Huang said. “With her leadership, I am confident that GDS International will continue its successful development in international markets.”

NASDAQ- and HKEX-listed GDS had revealed in its third quarter 2023 earnings call that it planned to fund the expansion of its international business through a mixture of equity and debt, with the firm targeting a private placement of at least $400 million for the equity portion.

Earlier this month, the company confirmed reports that it had held talks with private equity investors regarding a potential capital raise for its international business spanning Hong Kong and Southeast Asia.

GDS’s existing revenue-generating assets outside of mainland China consist of an 18.2MW facility in Hong Kong and the first phase of a 158.7MW campus in the southern Malaysian state of Johor, both of which are self-developed and owned. The company also provides services for third-party data centres in Singapore, including assets owned by STT GDC.

GDS, which counts Hillhouse, Singaporean data centre provider STT GDC, sovereign fund GIC and insurance giant Ping An as investors, said that in the third quarter its international business made a “material” contribution to its new capacity under lease for the first time.

Loss Widens

Capping a busy Tuesday for the group, GDS Holdings posted an attributable loss of RMB 4.3 billion ($604.2 million) for 2023, widening from a loss of RMB 1.3 billion the previous year.

Net loss in the fourth quarter of 2023 was RMB 3.2 billion, ballooning from losses of RMB 177.9 million in the year-earlier quarter and RMB 420.8 million in the third quarter of 2023.

Net revenue reached nearly RMB 10 billion, up 6.8 percent, with service revenue rising similarly.

“In 2023, we made steady progress towards achieving our objectives,” Huang said in the group’s full-year results. “In China, we were highly selective on new bookings, focused on delivering backlog to customers, and controlled capex. At the same time, we made great progress in growing our international presence.”

GDS’s Hong Kong-listed shares were down more than 26 percent in Wednesday trading.