Data Centre Operator DayOne Buying Back $385M in Shares From GDS

DayOne, the overseas arm of Chinese data centre giant GDS Holdings, has agreed to repurchase $385 million in shares from GDS, further reducing the Shanghai-based group’s minority stake in its offshore spinoff.

DayOne is buying back the ordinary shares at the same price as the $2 billion in convertible preferred shares issued in a Series C round announced last week. Those funds added to the $1.9 billion raised in DayOne’s previous equity rounds in 2024.

The repurchase deal will let GDS recycle 95 percent of its original principal invested in Singapore-based DayOne at a nearly 6.5 times multiple of money, leaving the NASDAQ-listed group with a roughly $2.2 billion equity stake in DayOne, it said Tuesday in a release.

“GDS currently intends to reallocate the proceeds of the share repurchase to invest in compelling new business opportunities with attractive return potential in its core business in China,” said the company led by chairman and CEO William Huang.

Distance Grows

Formerly known as GDS International, DayOne describes itself as having separate corporate governance, operations, finance and technology functions from its mainland China parent.

Huang also chairs DayOne, and analysts have described last year’s rebrand as a move to distance the international unit from the Shanghai-based group amid geopolitical risks, while potentially positioning the platform for an initial public offering.

Raymond James analyst Frank Louthan alluded to the strategy in a Tuesday research note in which he surmised that the further dilution of GDS’s ownership would enhance DayOne’s ability to expand into additional markets like the US.

“We still believe that GDS will pursue its right to have an IPO of DayOne,” Louthan said.

The US investment bank reiterated its “strong buy” rating for GDS, targeting $55 per share, and estimated that the repurchase deal would reduce GDS’s ownership in DayOne to 24 percent on a fully diluted basis. GDS shares closed Tuesday on the NASDAQ at $42.34, down 3.8 percent on the session.

Cashing Up

DayOne’s $2 billion Series C round was led by an existing investor, Manhattan-based Coatue Management, with participation from institutions including the Indonesia Investment Authority, a current partner with DayOne on a joint venture in that country.

The proceeds from the funding round will advance the development of DayOne’s Finland business, centred on hyperscale campuses in the cities of Lahti and Kouvola, which form the foundation of the firm’s Europe strategy.

In Asia, the Series C capital will be deployed to support the growth of DayOne’s footprint across Singapore, Malaysia’s Johor and Indonesia’s Batam, as well as markets in Thailand, Japan and Hong Kong.

“These investments will strengthen delivery across DayOne’s secured customer commitments of approximately 1GW, reflecting one of the fastest growth trajectories among next-generation hyperscale infrastructure platforms,” the company said last week.

The $1.9 billion raised in DayOne’s earlier equity rounds included commitments from Japan’s SoftBank, Citadel boss Ken Griffin, private equity major Hillhouse and its real assets arm Rava Partners, as well as Boyu, Princeville Capital and Tekne Capital.