Chindata Group has shed some light on the fate of recently departed CEO Alex Ju, who will assume a new non-executive role as he prepares to exit the Beijing-based data centre provider he founded more than six years ago.
As part of a “transition agreement”, Ju will act as the non-executive vice chairman and a member of the strategy committee of the board of directors for up to 18 months and possibly longer if extended by the company, NASDAQ-listed Chindata said Tuesday in a release.
Ju will also convert around 13 million Class B Chindata shares held by companies he controls into Class A shares, giving him one vote per share instead of the 15 votes per share he now enjoys for that stock, with the company having issued more than 391 million Class B shares headed into the IPO. Should Ju be converting a large enough portion of his super-voting equity, the shift could open the door for potential acquisitions of Chindata, which controls nine data centre projects in China in addition to four in Malaysia and two more developments in India.
Ju left the CEO post last month, a little over a year after private equity firm Bain Capital led Chindata’s IPO with backing from institutional investors APG, BlackRock and the Canada Pension Plan Investment Board. After a promising start, Chindata’s American depositary shares have fallen 66 percent in value over the past 12 months, part of a broader wipeout of Chinese data centre operators listed on US exchanges.
With Ju’s exit, Chindata in December appointed Bain Capital executive vice president Fei Xu to serve as interim CEO while the company searches for a permanent leader. The exit agreement for Ju also stipulates that the former executive will continue to be bound by non-competition and non-solicitation agreements for as long as he owns any equity in Chindata and for nine months thereafter, the company said.
Bain had assembled Chindata through the 2019 purchase of an infrastructure unit of Chinese internet service provider Wangsu, which it then stapled to its existing Singapore-based Bridge Data Centres unit ahead of the NASDAQ offering in October 2020.
At the time of its listing, more than 81 percent of Chindata’s revenue came from services to ByteDance, the parent company of TikTok, which was forced to abandon a planned US stock listing last year in the face of opposition from mainland regulators and saw its founder step down from the CEO role in May.
Before going public, Bain held a 57.17 percent stake in Chindata, while Dutch pension fund manager APG was the next largest shareholder at 10.43 percent. South Korea’s SK Holdings ranked third on the list after having paid a reported $300 million in July 2020 to acquire an 8.94 percent stake.
Another 6.63 percent of the company was held by directors and executive officers, with Ju having announced to the US Securities and Exchange Commission last March that he intended to sell half of his 6 million American depositary shares in the company for $48 million.
As of last February, Bain continued to hold a 43 percent stake in Chindata, with public records identifying Sylebra Capital as the largest institutional shareholder with 4.18 percent. CPPIB holds 3.39 percent of the company, and BlackRock is also in the top 10 investors with a 1.39 percent stake.
Casualties of Information War
Chindata operates carrier-neutral hyperscale data centres in China under its namesake brand and in Malaysia and India under the Bridge Data Centres banner.
The company’s stock slide comes despite having reported $321.3 million in revenue in the first nine months of 2021, up 62 percent year-on-year. In November, Chindata announced the development of its largest facility ever as it broke ground on a 100-megawatt data centre in Malaysia’s Johor state.
While Chindata’s shares are down 6.3 percent since the start of this year, other Chinese data centre operators have ticked up slightly after taking a pounding in 2021.
NASDAQ-listed GDS Holdings, which operates 452,830 square metres (4.9 million square feet) of data centres in mainland China, is up 1.9 percent in value in the year to date but down 55 percent in the past 12 months, while stock in Blackstone-backed mainland data centre operator VNET is up 2 percent in 2022 but down 76 percent since the same date a year ago.
With Ju exiting and his super-voting rights being trimmed back, Chindata has reportedly been discussing possible partnerships with new investors interested in its client relationships and network of data centres.