Chinese data center firm GDS has secured $1 billion from new investors for its international operations.
GDS Holdings this week announced that its international affiliate, DigitalLand Holdings Limited (aka GDS International), which holds GDS’ data center assets and operations outside of mainland China, has entered into definitive agreements for certain institutional private equity investors to subscribe for $1 billion of newly-issued Series B convertible preferred shares.
The investment is mostly comprised of new US investors, led by Coatue Management, with "substantial participation" by the Baupost Group.
Established in 2022, GDS International’s portfolio currently comprises approximately 480MW of data center capacity in service and under construction and an additional 590MW held for future development across sites in Hong Kong, Singapore, Malaysia (Johor), Indonesia (Batam), and Japan (Tokyo).
Together with its existing equity, GDS said the new raise will enable the development of up to 1GW of data center capacity.
Closing of the deal is expected to occur as soon as the conditions are satisfied. Following that, GDS Holdings will own approximately 37.6 percent of the equity interest of GDS International, valued at around $1.3 billion.
“I am delighted to announce this new capital raising for our international business,” said William Huang, chairman and CEO of GDS Holdings and chairman of GDS International.
“Within a short period of time, we have created new markets in and around Singapore-Johor-Batam which are attracting both regional and global hyperscale demand. We see tremendous opportunities for growth in these markets as well as in other new markets which we are currently evaluating... We look forward to further achievements by our international business as we take it to the next level.”
GDS was founded in 2006 and operates dozens of data centers across Greater China, including in Suzhou Kunshan, Chengdu, Shanghai, Shenzhen, and Beijing. STT GDC and Hillhouse are existing investors in GDS.
Reports that GDS sought $1 billion in investment in its international data center unit surfaced in August. In March of this year, GDS raised $587 million for its international data center unit. This was announced just days after the company confirmed that it was looking to sell a stake in the unit.
“Data centers are mission critical infrastructure to support the future of AI and cloud,” said Philippe Laffont, founder of Coatue. “We have been very impressed by the management team, and its capabilities to execute and expand the footprint of the business in such a short period of time. We are excited to work alongside management to expand GDS International into a global leading data center platform.”
Technology-focused investment firm Coatue has previously invested in GPU cloud provider (and former cryptofirm) CoreWeave across multiple rounds, GPU cloud company Together AI, crypto/AI firm Hut8, AI chip companies Cerebras and SiFive, and generative AI firms Stability.ai, Hugging Face, and Scale, as well as several battery companies. It recently provided financing to Brazilian data center firm Scala.
“As a shareholder of GDS Holdings, we are extremely impressed with William and his team and GDS International’s ambitious and credible international expansion plan,” added Richard Carona, partner at the Baupost Group. “We’re pleased to support their growth as part of this Series B financing.”
The Baupost Group is a hedge fund founded in 1982 with $25 billion of assets under management. It invests across asset classes, including publicly traded debt and equity securities, private credit, private equity, and real estate investments. It has previously invested in Google owner Alphabet, satellite firm Viasat, and telcos Liberty Global and Altice.
GDS International’s financial and legal advisors for this transaction are Morgan Stanley Asia Limited and White & Case, respectively. Latham & Watkins served as the legal advisor for Coatue.