Chinese content delivery network (CDN) operator ChinaCache has decided against selling most of its data center business to a group of local investors.
The company previously planned to divest a 79 percent stake in its subsidiary, Xin Run Technology, in exchange for RMB221.2 million ($35m).
The deal was intended to strengthen its balance sheet and fuel the expansion of the “asset-light and technology-driven” CDN business. It now says that the agreement undervalued its data center infrastructure, and that going forward, it will focus on “three tiers” - providing data center services alongside CDN and Internet exchange services.
Business as usual
ChinaCache was founded in 1998, becoming one the first CDN operators to get a license from China’s Ministry of Industry and Information Technology. CDNs use a distributed system of servers in multiple data centers across the world to serve content and applications to end-users faster and more reliably.
The company runs the Atecsys, the largest carrier-neutral data center campus in Beijing, which offers over 80,000 square meters of white space. It also hosts the first IXP to serve the Chinese market.
In early 2015, ChinaCache established a European subsidiary with headquarters in London.
In the middle of 2017, the company announced it would sell most of Xin Run, which owns and operates its data center business, to a consortium of investors that comprised Tianjin Shuishan Technology (47.67 percent), Shanghai Qiaoyong Equity Investment Fund Management (26.33 percent) and Tianjin Dingsheng Zhida Technology (5 percent).
What made this deal interesting was the fact that both Tianjin Shuishan and Tianjin Dingsheng are controlled by Song Wang, chairman and CEO of ChinaCache, so the deal would have effectively kept him in charge of Xin Run. It looks like this particular scenario will no longer play out.
“China is rapidly adopting a digital lifestyle and cloud and new data-intensive technologies, such as AI and big data analytics, are fanning demand for increasing Internet data center capacity and related services,” Wang said in a statement.
“With ten Internet data centers in Beijing hosting capacity for 12,400 racks, Xin Run is growing quickly and capturing wide-spread demand from government agencies and businesses, including several leading Internet and cloud service enterprises. Against this backdrop, we see a compelling value proposition as we offer customers total solution services, comprised of our Internet data centers, Internet and Cloud exchange centers and our extensive content delivery network.
“We believe this three-layered structured network will provide an integrated and broad-base of operations from which we can capitalize on our strengths and deliver sustained shareholder value.”