Chinese-Backed Data Centre Giant Aims for HK IPO at £9B Valuation

Just over two years after being acquired by a consortium of Chinese investors, UK data centre developer Global Switch is preparing for a stock market listing in Hong Kong later this year that could value it at more than £9 billion ($11.52 billion), according to an account by the UK’s Sky News.

The Britain-based high tech facility developer is said to be hiring investment banks in the coming weeks to help list the company after years of speculation that it could go public, the UK news site reported.

A mainland consortium led by entrepreneur Li Qiang and backed by Jiangsu Sha Steel Group and Ping An Capital had paid £2.4 billion to purchase a controlling 49 percent stake in Global Switch from British developers David and Simon Reuben. In 2018, investors including AVIC Trust and Hong Kong affiliates of China Citic Bank and Haoyue Capital put in another £2.1 billion to acquire a further 24.99 percent of the company.

IPO Slated for 2019

The listing for Global Switch is planned to take place this year, according to the UK press account, with a company shareholder cited by Sky News suggesting that a £8.4 billion valuation discussed last year was likely to be surpassed in an eventual flotation,

Global Switch had previously indicated its intent to achieve a public listing on a “leading” international stock exchange in Europe, Asia or North America in 2019.

The listing would give Global Switch’s investors a chance to quickly monetise the 340,000 square metres (3,600,000 square feet) of data center space that the company currently operates across Europe and Asia Pacific.

Establishing a Hong Kong Presence

When the mainland takeover of Global Switch was announced in December 2016, Li Qiang’s data centre service provider Beijing Daily Tech, together with China Telecom Global (the international arm of China Telecom), had already agreed to occupy two of five buildings in a joint venture data centre that the companies were developing northern Hong Kong’s Tseung Kwan O.

Daily Tech and Chinal Telecom officially opened the HK$5 billion 764,237 square foot (71,000 square metre) facility in TKO Industrial Estate one year later, adding to its portfolio in the city.

Mainland Investors Take Hold of Global Data Warehouses

In addition to having facilities in Hong Kong, the listing in the Asian financial hub also reflects the Chinese characteristics of Global Switch’s shareholder register, and its mission to provide a tech backbone for mainland companies expanding globally.

At the time of Daily Tech’s buyout in 2016, the company’s executive chairman and chief executive John Corcoran said that Global Switch aims “to become the data centre provider of choice for new customers from across the globe, especially Chinese companies growing in Asia and Europe, and Western companies growing in China.”

Last July, a consortium of Chinese investors including AVIC Trust and Hong Kong affiliates of China Citic Bank, Haoyue Capital and Jiangsu Sha Steel paid £2.1 billion ($2.78 billion) to acquire a 24.99 percent stake in Global Switch, taking the mainland-based interests to a total of 75 percent.

While some analysts have raised security concerns about having a mainland firm hold the keys to corporate data, in a recent statement Global Switch’s management defended the company’s neutrality.

“(Global Switch) releases space to its customers who fit out their own secure cages with their own servers – these cannot be accessed by Global Switch nor its investors,” the company pointed out.

Global Switch is also part-owned by Aldersgate Investments, a vehicle set up by the billionaire British developer brothers David and Simon Reuben, who have long backed Global Switch, which was founded in 1998.

Aiming at a $12B Data Centre Market

Focusing on the European and Asian markets, Global Switch builds and operates high quality, technical real estate with the right power, cooling and physical security required by IT service providers, the company said in its statement.

The Asia Pacific data center construction market is estimated to generate revenue of around $12 billion by 2023, growing at a compound annual growth rate of over nine percent during 2017-2023, thanks to increasing demand for cloud-based services, according to the market research platform, Research and Market.

Investments in millions of dollars towards facilities construction and expansion projects to accommodate the demand for services is promoting the development of the market especially in China and India, it said.