The world’s hottest real estate asset class has scorched institutional investors including Bain Capital, BlackRock and CPPIB as Chindata Group announced late Friday the departure of founder and chief executive Alex Ju Jing, with the Asian data centre platform’s stock having now lost nearly 69 percent of its value since 1 January.
Ju left the company immediately, ending his role as CEO as well as losing his seat on the board of directors’ compensation committee in addition to his spot on the corporate governance and nominating committee, the Nasdaq-listed company said in a statement.
The change in leadership at Chindata comes just one month after Yiming Zhang, the founder of the data centre operator’s primary customer, ByteDance, stepped down from his chairman role and left the board of the parent company of TikTok.
Bain Capital had led a $540 million IPO for Chindata in October last year, thanks in part to a 73 percent surge in revenue during the first half of 2020, compared to the same period a year earlier. In 2019 ByteDance had accounted for 68.2 percent of Chindata’s total revenue, with that slice jumping to 81.6 percent from January through June 2020.
Shares Drop 32%
The announcement of the leadership change at the Beijing-based company coincided with a nearly 32 percent drop in its share price on Friday, with the stock trading at $5.92 per share on Monday, which is less than half of its $14 IPO price and 68.84 percent less than its value on 1 January.
With Ju’s departure, Chindata has appointed Bain Capital executive vice president Fei Xu as interim CEO, with the company having already begun a search for a permanent leader. Currently a member of the portfolio group for Bain Capital Private Equity, Xu has been with the firm since 2011 and has previously helped to manage China auto components group ASIMCO as well as US-based B2B service companies VXI and Daymon, according to Bain’s website.
Bain Capital 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, before proceeding with the Nasdaq offering last year.
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 of 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 on 31 March his intention to sell half of his 6 million American Depositary Shares in the company for $48 million.
As of February of this year, Bain Capital continued to hold a 43 percent stake in Chindata, with public records showing that Sylebra Capital Ltd is currently the largest institutional shareholder with a 4.18 percent stake.
The Canada Pension Plan Investment Board (CPPIB) holds 3.39 percent of the company and BlackRock is also in the top 10 investors with a 1.39 percent stake.
Mainland Data Centre Stocks Shunned
The management challenge at Chindata adds to months of financial pain for mainland China data centre operators listed on US exchanges, as scrutiny by regulators in Beijing of Chinese internet firms on American stock markets spooks investors.
Chindata’s stock slide comes despite the company having reported $321.3 million in revenue in the first nine months of this year, which was a 62 percent increase over the same period in 2020. Just last week the company had announced the commencement of development on its largest facility ever as it broke ground on a 100MW data centre in Malaysia’s Johor state.
These milestones have not been enough to reassure investors, however, with shares in other Chinese data centre operators also taking a pounding in the US this year. Since 1 January, shares in Nasdaq-listed GDS Holdings, which operates 452,830 square metres (4.9 million square feet) of data centres in mainland China, have lost 47.5 percent of their value to stand at $49.25 each at the time of publication, while stock in Blackstone-backed mainland data centre operator VNET has slid more than 76 percent on the same exchange this year.