Data centre operator GDS joins Chinese companies’ march for Hong Kong secondary listing, aiming to raise US$1.8 billion

Data centre service provider seeks as much as HK$13.8 billion from secondary listing in Hong Kong, term sheet shows

Nasdaq-listed firm may price the local offering at up to 10 per cent premium to its American depositary shares

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GDS Holdings, a Shanghai-based independent data centre service provider, is joining the Hong Kong secondary listing bandwagon. Photo: Handout

Published: 10:57am, 21 Oct 2020Updated: 11:09am, 21 Oct 2020

GDS Holdings, an independent data centre service provider, is joining a bandwagon of US-listed Chinese companies to raise funds in Hong Kong where hot money inflows have helped fuel a stock rally for three weeks.

The firm is seeking to raise up to HK$13.8 billion (US$1.8 billion) from a secondary offering of 160 million shares at a maximum of HK$86 each, according to a term sheet seen by South China Morning Post. That works out to a premium of 10 per cent to its American depositary shares on Tuesday.

The shares last traded at US$80.67, having risen 56 per cent of twice the gain in the Nasdaq Composite Index. Each ADS represents eight ordinary shares.

There is an option to sell an additional 24 million shares to meet any excess demand. The local share offering is expected to close next Tuesday and start trading on November 2, according to its timetable. JPMorgan, Bank of America, China International Capital Corporation (CICC), Haitong International are joint sponsors for the deal.

Since Alibaba Group’s secondary listing in Hong Kong last November, at least 10 other Chinese companies have taken the same route for additional capital this year. Including the largest involving JD.com and NetEase, they have cumulatively raised more than US$15.4 billion in proceeds, according to data from Refinitiv.

Hong Kong has seen almost HK$100 billion of funds flowing into the local financial system since mid-September, the monetary authority said last week, an influx that has driven up the exchange rate of the local dollar, prompting it to intervene to weaken the local currency. The Hang Seng Index has risen more than 5 per cent over the past three weeks, with Ant Group’s impending IPO luring hot money.

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