Bain-Backed APAC Data Center Platform Chindata Said Prepping for $400M US IPO

Bain Capital-backed Chinese hyperscale data centre operator Chindata Group is getting ready to make its debut on the New York Stock Exchange later this month, according to a report by Reuters on 1 September citing sources familiar with the planned offering.

The news agency indicated that two sources had confirmed that the five-year-old company is preparing to file confidentially with the Securities and Exchange Commission for an American IPO with hopes of raising up to $400 million.

Mainland media reports last month pegged the offering at a valuation of between $3 billion to $4 billion, with Credit Suisse, Citibank and Morgan Stanley said to be involved in the process.

Building a Pan-Asian Platform

Bain Capital first invested in Chindata in 2018 before investing an additional $570 million in May of last year to acquire a controlling stake in the company from Shenzhen-listed network infrastructure provider Wangsu Science and Technology Company.

By July of 2019 the US private equity firm announced a merger of its mainland rack space platform with Singapore-based Bridge Data Centres, which had acquired a pair of server farms in Malaysia in 2018 and has plans in the works for a third in India. Bain had acquired a controlling stake in Bridge in 2017.

The new pan-Asian platform was renamed Chindata Group, with reports already emerging in December of last year regarding plans for a 2020 IPO. Just last month South Korea’s SK Holding was reported by media in Seoul and Hong Kong as having paid $300 million to acquire an 8.9 percent stake in Chindata Group, with that deal valuing the company at $3.1 billion in what now appears to be the run-up to its IPO.

Data Centres Continue to Gain Major Traction

The Bain news comes after Hong Kong’s Gaw Capital Partners entered a joint venture with Beijing-based Centrin Data to develop hyperscale facilities last year with an existing, 6,400-rack property in Kunshan, near Shanghai.

“We see significant opportunities in the IDC sector, which is fast becoming a major theme in China as the country deepens its embrace of advanced technology,” Gaw Managing Principal and Head of Capital Markets told Mingtiandi last November.

In turn, the Gaw JV came hot on the heels of UK fund manager Actis and Singapore’s GIC spending $180 million in October of last year to acquire a controlling stake in mainland rack space platform Chayora.

In June of this year, Blackstone Group made its own China data centre play by injecting $150 million into Chinese data centre developer 21Vianet Group, which is already listed on the NASDAQ, with the success of that deal said to be one of the factors in Chindata’s decision to forgo the Hong Kong Stock Exchange in favour of a US listing.

Investors Weigh Fund Raising Against Geopolitics

Despite lingering Sino-US tensions and increasingly rigid regulations targeted at Chinese firms, through the end of August, there have been 19 IPOs by Chinese firms on the NYSE, raising nearly $7 billion, twice the total for 2019 according to Refinitiv.

Gaw-backed real estate website Beike and rang up $2 billion in its August IPO, and if successful, Chindata would be the twentieth Chinese listing this year.

The growth of cloud computing, COVID, and the PRC’s aggressive push towards 5G networks are expected to put even more demand on data centres, leading to sector growth expected to average above 10 percent per year through 2024 in APAC — and bringing the market’s value to $28 billion.

If that weren’t enough incentive for data centre investment, Beijing’s Intelligence Research Group projected China’s data centre market on its own to be valued at RMB 200 billion by the end of 2020.

6 More Server Sheds on the Way

With $100 billion in assets under management around the world Bain Capital has lately begun allocating a slice of those resources toward network infrastructure including on 27 August putting $750 million into San Jose’s Nutanix, a hybrid cloud infrastructure company.

Beijing-headquartered Chindata operates carrier-neutral hyperscale data centres in Beijing (where there are seven facilities), the Yangtze River Delta area and the emerging Greater Bay Area, as well as two in India and four in Malaysia. According to its website, Chindata has plans to deliver six more 36-megawatt centres in the next six months.

After beginning operations in 2016, Chindata founder and CEO Alex Ju now has designs on becoming “The leading hyperscale data centre solution provider in emerging markets,” and to do it sustainably, using green energy.