GDS Holdings Ltd has agreed to sell a stake in its data centre business outside of mainland China to a group of private equity (PE) investors for $587 million.
GDS International, a wholly-owned subsidiary that holds GDS’ international data centre assets and operations, will sell a combined 43.9% stake to investors including Hillhouse, Rava Partners, Boyu Capital, Princeville Capital, Tekne Capital, and other firms, while the parent group will retain a 56.1% stake, GDS announced in a Tuesday statement.
The deal will allow GDS International to obtain dedicated financing for the independent development of its international business, it said.
These PE buyers agreed to subscribe for $587 million of Series A convertible preferred shares newly issued by GDS International. Each Series A share will be convertible into one ordinary share of GDS International at any time at the holder’s option, or automatically converted, upon the completion of the firm’s IPO, according to the statement.
GDS International was valued at $750 million pre-money in the deal. The firm’s post-money valuation, including its forecast net debt of about $935 million at the end of 2024, is approximately $2.3 million. This is equivalent to about 24 times of GDS International’s forecast adjusted EBITDA for the full year of 2025.
GDS saw “tremendous opportunities for growth” in key markets including Hong Kong and Singapore, as well as Johor, a southern Malaysian state linked to Singapore, and Batam in northern Indonesia, said William Huang, GDS’ chairman and CEO, in the statement.
Huang, who will continue his role as GDS International’s chairman of the board after the deal, said that the international business will continue to grow, “further emulating” the parent’s success in China.
GDS International was established in 2022 with its corporate headquarters in Singapore. Its portfolio comprises 330 MW of data centre capacity in service and under construction and a further 340 MW held for future development across strategic locations in, among others, Hong Kong, Singapore, Johor, and Batam.
The business has secured commitments and reservations from global and Chinese customers for over 200 MW of capacity, of which over 70 MW is already revenue-generating.
Dual listed in Hong Kong and Nasdaq, its parent GDS posted just over $1.4 billion in 2023 net revenue, up 6.8% from 2022. The parent booked a significantly widened net loss of almost $603.6 million last year, versus $175.1 million in the year earlier, show its latest financial results.