GDS Holdings Limited, a China-based developer and operator of high-performance data centres in China and Southeast Asia, has raised $1 billion for its international affiliate from US investors who seek to capitalise on the infrastructure supporting a future of artificial intelligence (AI) and cloud.
Its affiliate DigitalLand Holdings Limited, or GDS International, which acts as the holding company for GDS’s data centre assets and operations outside of mainland China, entered into agreements for private equity (PE) investors to subscribe for $1 billion of its newly issued Series B convertible preferred shares, according to a GDS statement.
The Series B investment comprises new US investors, led by US hedge fund Coatue Management with substantial participation from its Boston-based counterpart The Baupost Group.
Together with GDS International’s existing equity, the Series B financing will be sufficient to capitalise the development of up to 1 gigawatt of total data centre capacity, which will double the size of the affiliate’s current facilities in service and under construction, according to the statement.
“Data centres are mission-critical infrastructure to support the future of AI and cloud,” said Philippe Laffont, founder of Coatue.
Once the Series B transaction is completed, GDS will own approximately 37.6% of its international affiliate in the form of ordinary shares. The value of its equity interest in GDS International implied by the Series B subscription price is about $1.3 billion.
GDS will no longer consolidate GDS International for accounting purposes or have the right to appoint a majority of directors to GDS International’s board.
“Within a short period, we have created new markets in and around Singapore-Johor-Batam, which are attracting both regional and global hyperscale [cloud-computing service] demand,” GDS’s founder, chairman and chief executive William Huang Wei said. “We see tremendous opportunities for growth in these markets, as well as in other new markets which we are currently evaluating.”
Founded in 2022 with corporate headquarters in Singapore, GDS International’s portfolio currently comprises about 480 megawatts (MW) of data centre capacity in service and under construction and an additional 590 MW held for future development across strategic locations in Hong Kong, Singapore, Johor state in Malaysia, Indonesia’s industrial city Batam, and Tokyo in Japan.
The latest investment followed the completion of an upsized Series A round at $672 million by GDS International earlier this year. The affiliate signed agreements in March with investors including Hillhouse Capital Group, Rava Partners, Boyu Capital, Princeville Capital, Tekne Capital, and others to raise the Series A round, for which it initially targeted $587 million.
Dual-listed in Hong Kong and the US, GDS saw its net revenue from mainland China operations grow 8.9% year on year to $355 million. Its overseas business booked an almost sevenfold increase to $35 million, according to its latest financial results.