Fund Manager Actis Investing $180M for Majority Stake in China Data Centre Developer

UK-based fund manager Actis has taken a majority stake in China-focused data centre specialist Chayora Holdings with a $180 million investment.

The London-headquartered firm, which is providing the capital through its Actis Asia Real Estate Fund and other managed investment vehicles, has already completed the $64 million first tranche of the investment.

A person close to the deal confirmed to Mingtiandi that the fund manager’s majority share holding in the Hong Kong-based data centre specialist will be increased through subsequent tranches of investment in the eight year-old venture.

Chayora will use the fresh capital, supplemented with $250 million of debt, to develop a pair of hyperscale facilities in the company’s 2.3 million square foot (213,677 square metre) campus 120 kilometres southeast of Beijing.

The additional facilities will bring the total number of hyperscale centres in Chayora’s Tianjin campus to three, out of nine facilities which the company has achieved licenses for at the location, all of which will serve the Greater Beijing area.

The Series C funding round comes three years after Standard Chartered Bank Principal Finance Real Estate invested $73 million to purchase a 19.5 stake in Chayora. Actis entered the Asia real estate investment market last year through its purchase of the Standard Chartered unit, with the Chayora stake among seven assets transferred as part of the transaction.

Powering International and Domestic Cloud Providers

“We are very excited to extend our partnership with Chayora and to support its next phase of expansion and growth with this Series C round of funding,” said Actis’ head of Asia real estate, Brian Chinappi. “With a focused approach to develop world class standard data centre campuses in China, Chayora has amassed all the essential ingredients in a challenging regulatory environment to be a one-stop data centre infrastructure solution provider.”

Actis’ investment will enable Chayora to triple its data centre footprint on the campus, adding an additional 6,000 racks, which will provide international cloud providers and domestic hyperscalers, such as Alibaba and Tencent, further bandwidth to supply the 150 million people eating up data in the greater Beijing area.

Chayora will also use a portion of the capital to expand the Tianjin campus and buy land for its planned 280MW Shanghai campus.

Developing One of the Largest Campuses in the World

“Data volumes continue to grow in exponential terms and in China, as the world’s largest online market, the levels of technical innovation in artificial intelligence, machine learning and related applications in responding to end user demands, means being in China offers huge potential to global sector leaders,” said Chayora’s CEO, Oliver Jones.

Jones told Mingtiandi that while the data centre market offers huge growth potential, the complexity and highly regulated nature of the Chinese telecommunications sector requires data centre developers and operators to commit to a detailed understanding of a range of licensing, power, network connectivity, security and operational service-related matters, which can prove challenging for prospective entrants into the market.

“What is one of the most exciting things about the Chayora programme in China, where the growth opportunities for domestic and international operators are massive, is that we now have all the licences in place to deliver a further eight centres following the completion of the first hyperscale facility on the Tianjin campus,” Chinappi said.

The Tianjin campus will eventually house six 3,000-rack hyperscale facilities and three smaller 1,000-rack high performance centres specifically designed to support artificial intelligence and machine learning.

Once finished, the campus will provide 300MW of gross power across 21,000 racks, making it one of the top five data centre campuses by site area in the world, according to Jones.

According to JLL, the world’s largest data centre campus currently is the Range International campus in Langfang, 55 kilometres south of Beijing. The 6.3 million square foot facility was developed jointly by IBM and Range International Information Group six years ago.

Racing to Keep Up with Demand

With Alibaba Cloud estimating that China’s cloud services market is growing by 100 percent per annum, data centre providers are racing to keep up with demand.

Only last month, Shanghai-headquartered data centre developer GDS Holdings entered into an agreement with GIC to roll-out hyperscale facilities across China, just over a year after the company received a “Rock Solid” Data Centre Partner Award from Internet titan Alibaba.

That tie-up with the $359 billion Singaporean sovereign wealth fund came after GDS had secured a $150 million equity investment from Ping An Overseas Holdings to help fund its expansion.

Actis’ latest investment in Chayora follows six months after the UK firm sold a pair of logistics centres in the Incheon Terminal Logistics Complex in South Korea to an undisclosed institutional investor.

The investment firm had also acquired that 85,602 square metre complex as part of its takeover of Standard Chartered Principal Finance Real Estate last year.