This Chinese Data Center Provider Expects U.S. IPO To Raise $500M

As hyperscalers like Amazon and Microsoft continue to build new data centers at a rapid pace globally, a newly formed Beijing-based wholesale data center provider is eyeing its IPO in the United States in 2020.

Backed by Bain Capital, Chinese data center provider ChinData Group is planning to launch its initial public offering in the U.S. market this year.

The Beijing-based data center colocation and platform specialist is expecting IPO share sales to hit $500 million, according to Bloomberg. ChinData Group was created last year through the merger of Singapore-based Bridge Data Centres and Chindata in a move by Bain Capital to create a pan-Asian data center platform powerhouse.

Chindata Group providers hyperscale wholesale and custom-build data center solutions with facilities in China, India and in Southeast Asia. The company is seeking to benefit from the high demand among enterprises for cloud services and the expansion of global cloud providers like AWS, Google and Microsoft who are building and buying new data centers globally at a rapid pace.

[Related: Data Center Giant Equinix To Acquire Packet To Drive Edge Computing]

ChinData Group has reportedly selected Citigroup, Credit Suisse Group AG and Morgan Stanley to help launch its IPO that is expected to take place sometime in 2020. Bain and ChinData did not immediately respond to comment by press time.

When Bain Capital created ChinData Group in 2019, the company said it would inject more capital to expand ChinData’s footprint to more than 300 megawatts of capacity over the next two year to become one of the largest independent third-party data center platforms in Asia. The company specializes in wholesale colocation, big data, edge computing, cloud, network connectivity and various IT services.

ChinData Group is looking to follow in the footsteps of Beijing-based data center provider GDS Holdings, who in 2016, raised more than $200 million for its U.S. IPO. GDS stock has taken off over the past 12 months, climbing from around $27 per share in January 2019 to nearly $54 per share as of Tuesday. GDS’ market cap is currently more than $8 billion.

ChinData Group is seeking to win large deals in the hyperscale data center market which has taken over the industry in the last several years led by Apple, Amazon, Facebook, Google and Microsoft. These giant cloud providers are spending billions each quarter on building and equipping massive facilities, known as hyperscale data centers, on a global basis.

While a traditional data center typically supports hundreds of physical servers and other IT hardware along with thousands of virtual machines, most of the new data centers being built are hyperscale centers that house tens of thousands of servers and hardware alongside millions of virtual machines.

Hyperscale operators accounted for 33 percent of all spending on data center hardware and software in the first three quarters of 2019, up from 26 percent in 2017 and an increase from 15 percent in 2015. Hyperscale capex data center spending was on pace to break the record in 2019, where in the third quarter alone, saw spending exceeding $31 billion, up 8 percent year over year.