A sovereign wealth fund in the Middle East has invested $150 million in Guodong Network Communication Group, a communications infrastructure and service provider that manages almost 40,000 base stations across China, the deal’s advisor China Renaissance announced on Tuesday.
A statement by China Renaissance did not identify the sovereign wealth fund. The fresh proceeds will be used to finance the expansion of Guodong’s communication base stations and to improve its business performance, according to the statement, citing Guodong’s board director and deputy general manager Ji Xiaoling.
The deal makes Guodong the latest Chinese company to tap the Middle East for new funding amid the decoupling between the capital markets in China and the US due to increased geopolitical tensions.
As more Middle Eastern countries look to leverage China’s technology strengths to diversify their oil-dependent economies, the region’s big sovereign wealth funds could allocate between $1-2 trillion of their investments to China by 2030, Nicolas Aguzin, the Hong Kong stock exchange head, estimated.
Founded in 1997, Guodong specialises in the construction and rental of communications infrastructures with a nationwide network of over 40,000 base stations, only second to the state-owned telecom giant China Tower Corp Ltd, according to its website. Its businesses also cover the provision of indoor wireless distribution systems and data centres that can support cloud computing and the Internet of Things (IoT).
The privately-owned company runs subsidiaries and branch offices across 31 provinces and over 300 prefecture-level cities in mainland China, partnering with the country’s three biggest telecom operators China Mobile, China Telecom, and China Unicom.
“With the continued increase of mobile data traffic, telecom operators are expected to invest further in the transformation, optimisation, and upgrade of the communication network. That will bring more market development opportunities for Guodong,” said Ji.
Guodong has received funding from investors including Morgan Stanley and a sovereign wealth fund from Abu Dhabi. The investment arms of China’s Ping An Insurance Group, as well as top investment banks China International Capital Corp (CICC) and CITIC Group Corp, are also among its investors, shows the firm’s website.
The firm also secured senior loans of up to $99 million from the World Bank’s private investment arm IFC in early 2022 to finance its roll-out of over 9,000 telecom towers in nine poor provinces in China.
In January 2021, it announced the completion of a pre-initial public offering (IPO) round at 1.1 billion yuan (about $151 million). In April of the same year, Guodong signed a deal with CITIC Securities to receive the so-called pre-listing tutorial from the Chinese investment bank, but it did not go ahead with the domestic listing plan.