Chinese group pays £2.4bn for 49pc stake in data centre developer Global Switch

PUBLISHED : Thursday, 22 December, 2016, 7:02pm
UPDATED : Thursday, 22 December, 2016, 10:49pm

A Chinese consortium led by Jiangsu Sha Steel Group has paid £2.4 billion (HK$23.03 billion) in cash to acquire joint control in London-based Global Switch Holdings, an international data centre developer that is now building a HK$4 billion new facility in Hong Kong.

In a statement on Thursday, Global Switch said the consortium called Elegant Jubilee bought a 49 per cent stake in the company from British owner Aldersgate Investments, which is controlled by global private equity firm Reuben Brothers.

The new investment is expected to finance the strategic infrastructure expansion of Global Switch, as the firm plans to intensify its support for Chinese telecommunications and internet services companies.

Global Switch aims “to become the data centre provider of choice for new customers from across the globe, especially Chinese companies growing in Asia and Europe, and Western companies growing in China,” said its executive chairman and chief executive John Corcoran.

In Hong Kong, Global Switch is currently developing a 45,000-square metre data centre complex in the Tseung Kwan O Industrial Estate, due for completion next year.

Mainland Chinese data centre services provider Daily-Tech Beijing and China Telecom Global, the international business arm of the country’s biggest fixed-line network operator, have already signed a “pre-commitment” deal to take up space in two of the five buildings which will make up the Global Switch complex in Hong Kong.

“It will offer a launch pad for China Telecom Global and other Chinese companies to expand internationally,” Corcoran said.

Data centres are secure, temperature-controlled facilities built to house large-capacity servers and data storage systems, as well as equipped with multiple power sources and high-bandwidth internet connections.

These facilities are largely used to host and manage cloud computing operations. Cloud services enable companies to buy, lease or sell software and other digital resources online, just like electricity from a power grid.

Global Switch, which currently operates 10 data centre sites around the world, credited Daily-Tech chairman Li Qiang for assembling the major investors in consortium Elegant Jubilee.

Li said combining “the high quality data centres and operational excellence of Global Switch with the rapidly growing demand from Chinese customers creates a perfect match that will deliver significant future growth opportunities”.

Daily-Tech has also entered into a venture with Global Switch to co-develop a new data centre in Shanghai that will be launched within the next two years.

Elegant Jubilee’s lead investor is Jiangsu Sha Steel Group, part of the state-owned Jiangsu Shagang Group, which is one of the largest steel enterprises in China.

Other consortium members include institutional investor Essence Financial, insurance giant Ping An Group, and asset-management company Avic Trust, a joint venture between Chinese financial services group Avic Capital and Singapore’s Oversea-Chinese Banking Corp.

Daiwa Capital Markets Hong Kong was the sole financial advisor to the buyer consortium.

According to Global Switch, the consortium “also brings its existing relationships with major Chinese banks with significant international presence,” which would broaden the funding support available to the company.

Li and Geoffrey Xu, the managing director and head of China investment banking at Daiwa will represent Elegant Jubilee on Global Switch’s board.

Other directors include Simon Reuben and Alexander Bushaev from Reuben Brothers, Corcoran and David Doyle, the chief financial officer at Global Switch.