GIC, GDS team up for Chinese data centre venture

Singaporean sovereign wealth fund GIC has partnered with data centre developer GDS to build and operate hyperscale build-to-suit data centers outside of Tier 1 cities in China. 

The agreement will see individual companies set up for each development, with GIC buying a 90% interest in each project company, in addition to financing costs, upon completion, the developer announced

GDS will retain a 10% stake in each project and provide management and operating services for the joint venture. 

The JV will initially focus on developing BTS data centres for an internet and cloud service provider, which is one of the developer’s strategic customers.

The agreement’s first project, a facility under construction on a campus in the Jiangsu province, is nearly complete and a 90% stake in the asset will soon be offered to GIC.

“While our core business remains strongly focused on providing outsourced data center solutions in Tier 1 markets, where the entry barrier is high and where we believe our core value lies, the partnership with GIC enables us to supplement our primary offerings and cost effectively fulfil the broader requirements of strategic customers outside of Tier 1 markets, while maintaining our equity returns,” said GDS CEO and chairman William Huang.

“In addition, with this hybrid approach, we have succeeded in bringing external equity capital from a world class investor directly into the project level, providing us with a new and alternative funding solution which may be extended to a wider realm when and where it is optimal to do so.”

While there is high demand for capacity within tier 1 markets, the developer said large internet and cloud service providers also required substantial capacity at locations outside of tier 1 markets to host their less latency-sensitive data and applications.

Internet and cloud service providers have typically developed such capacity in-house in the past, however they are now actively seeking ways to outsource this part as well.

The deal comes after GIC and data centre provider Equinix formed a US$1bn joint venture earlier this year, focusing on data centre assets across Europe. 

Around the same time, Australian property group Lendlease embarked on a US$1bn joint venture with an institutional investor to build data facilities across Australia, China, Japan, Malaysia and Singapore.

Established in 1981, GIC invests in real estate, private equity, equities, fixed income and other asset classes and has more than US$100bn in assets under management. 

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