GDS Holdings announces $587M equity raise for international business

GDS Holdings announced that GDSH’s wholly-owned subsidiary, DigitalLand Holdings, that acts as the holding company for GDSH’s international data center assets and operations, has entered into definitive agreements for certain institutional private equity investors to subscribe for $587 million of Series A convertible preferred shares newly issued by GDSI. This transaction is a significant step forward in the Company’s strategy to obtain dedicated financing for the development of its international business on a standalone basis. GDS International was established in 2022 with its corporate headquarters in Singapore. Its portfolio currently comprises 330 MW of data center capacity in service and under construction and a further 340 MW held for future development across strategic locations in, among others, Hong Kong, Singapore, Malaysia, and Indonesia. GDSI has secured commitments and reservations from global and China customers for over 200 MW of capacity, of which over 70 MW is already revenue-generating. The Series A subscription price implies a pre-money equity valuation for GDSI of $750 million, which is approximately $3.92 per American Depositary Share of GDSH. GDSI’s implied post-money enterprise valuation, including GDSI’s forecast net debt of around $935 million at the end of 2024, is around $2.3 billion, which is equivalent to around 24 times GDSI’s forecast Adjusted EBITDA for the full year 2025. As of December 31, 2023, GDSH had provided a total of approximately $595 million of inter-company funding to GDSI, comprising approximately $411 million of paid-up share capital and $184 million of shareholder loans and other payables. On a pro forma basis including the proceeds of the Series A new issue, GDSI will have a total paid-up share capital of approximately $1.0 billion and will be sufficiently well-capitalized to complete the development of its current portfolio of data center capacity in service and under construction, without requiring further inter-company funding from GDSH. The shareholder loans and other payables due from GDSI to GDSH at the closing of the transaction will be repaid immediately after the Closing out of the proceeds of the Series A new issue. Post-Closing and on an as-converted basis, GDSH will own approximately 56.1% of the equity interest of GDSI in the form of ordinary shares. The remaining 43.9% equity interest will be held in the form of Series A shares by the Investors, including Hillhouse, Rava Partners, Boyu, Princeville Capital, Tekne Capital, among others. GDSI expects to establish an equity incentive plan which provides for the grant of options exercisable for such number of ordinary shares representing up to 15% of its issued share capital as of the Closing at the Series A subscription price. GDSH and certain Investors will have the right to appoint directors to the Board of GDSI proportionate with their ownership. Mr. William Huang will continue in his role as Chairman of the Board of GDSI. Each Series A share will be entitled to one vote and will be convertible into one ordinary share of GDSI at any time at the holder’s option. All Series A shares will automatically convert into ordinary shares of GDSI at, or following, completion of GDSI’s IPO, subject to certain conditions.