The COVID-19 pandemic has focused investor attention on tech-driven real estate opportunities, with Warburg Pincus-backed data centre operator Princeton Digital Group providing the latest evidence of this trend with a new financing deal announced today.
Having recently completed a 42MW data centre campus in Shanghai, Singapore-based PDG has secured $230 million in debt refinancing from China Merchants Bank, with plans for more mainland data centres in the coming months.
That pipeline of bit barns is part of a $1 billion expansion plan which the company has been pursuing since one of Canada’s largest pension managers joined a $360 million financing round for PDG in October, with the data centre startup’s founder seeing this new debt facility as an endorsement of his team’s progress to date.
“On the heels of our latest round of equity financing from Ontario Teachers’ Pension Plan and Warburg Pincus, this debt from China Merchants Bank is a testament to our ability to successfully execute on our strategy to build and deliver scale across APAC’s fastest-growing markets,” said PDG chairman and chief executive Rangu Salgame.
Data on the Delta
PDG’s latest project is a conversion of a former solar panel manufacturing facility in Shanghai’s Fengxian district, which the company brought online on 30 December and has since been in the process of turning over entirely to a single cloud provider.
That campus project consists of three data centre buildings with an accompanying office block on the site in Shanghai’s southern outskirts near where the city borders Hangzhou Bay.
With PDG having now signed contracts for the full capacity of the Shanghai facility, Salgame told Mingtiandi that his four-year-old company was able to secure the financing, and is now ready to bring online projects in Nanjing, the capital of eastern China’s Jiangsu province, and in Nantong, a fast-growing city just across the Yangtze River from Shanghai.
To follow through on its Yangtze River Delta scheme, PDG has already begun construction on its 43MW facility in Nanjing, a greenfield campus which it plans to complete later this year. Its 60MW campus in Nantong is still in the design stage, but Salgame points to a third quarter kick off for construction before completing the project during 2022.
Keeping Pace with China’s Cloud
“Our execution track record has helped us win business from some of the world’s largest cloud companies,” Salgame said. “We are delivering on the capacity requirements our hyperscale customers seek, when and where they need it.”
Both PDG and its competitors should find ample demand for their data centres in China, after the country notched record growth in spending on cloud infrastructure, including server facilities, during the fourth quarter of last year, according to a recent report.
Led by the cloud divisions of Alibaba, Huawei, Tencent and Baidu, spending on infrastructure services spend in China grew 62 percent during the last three months of 2020, compared to a year earlier, to reach $5.8 billion, according to independent tech analysis firm Canalys.
That growth was the fastest of any region worldwide, with China now ranking behind only the US in the scale of its cloud infrastructure market, the research firm said.
As a pan-Asian player seeking to fill that demand, PDG has a portfolio of five mainland China assets between its completed and in-progress projects, with a total of 18 locations across four countries in the region.
With plans on building 300MW of capacity in mainland China, PDG now says that it is actively evaluating acquisition opportunities in the Beijing, Shenzhen, and Shanghai areas.
Asia Tech Convergence
As PDG trumpets its latest China achievement, Salgame sees the company as serving demand for cloud services that is spreading beyond national borders as Asian tech providers go global, and North American giants expand in this region.
“The overall APAC market, by the end of this year will be bigger than North America, and is growing more quickly,” Salgame said. “In the next ten years, the growth will be coming from not only China, but from Indonesia, from India and from other parts of Asia.”
PDG, which operates in India, Indonesia and Singapore, in addition to China, sees itself poised to help companies build their clouds across national boundaries as they grow in the region.
“In China, we operate as a global provider and Chinese cloud companies see us as a global player. Then as they expand in Asia they see PDG as a trusted partner,” Salgame said. He added that, “For international cloud companies operating in China, we provide them with the PDG standards that they know in their home markets, or from our projects elsewhere in China.”