Bain Capital Data Centre Operator Raises $540M in NASDAQ IPO

A Bain Capital-backed data centre operator made a hyperscale debut on NASDAQ exchange yesterday with shares climbing by more than 20 percent after being priced at the top of their expected range.

Chindata, a Beijing-based developer and operator of Internet server facilities, raised $540 million in its IPO, it said in a statement, with the company’s American Depository Shares (ADS) priced at $13.50 each before closing the day at $16.23.

“As the solid bedrock of the digital world, we are on a mission to bridge the digital divide, redefine our industry and create state-of-the art products for our customers and their end-users,” said Chindata founder and CEO Alex Ju in an online bell-ringing ceremony to announce his company’s launch on the bourse.

The warm reception for the startup, which Bain assembled from separate property portfolios in China and Malaysia, demonstrates the returns that have brought some of the world’s largest private equity firms into the data centre market, as rising use of networks boosts the value of the centralised server facilities in Asia.

Value Rises 37% in Three Months

Chindata now trades on the NASDAQ under the symbol CD with the company having sold 40 million of its ADS in the public offering. The share sale valued the Internet infrastructure firm at $4.9 billion – up nearly 47 percent from the $3.1 valuation achieved in the company’s most recent private fund raising in July of this year.

Going into the listing, Bain held a 57.17 percent stake in Chindata, while Dutch pension fund manager APG was the next largest shareholder at 10.43 percent. South Korea’s SK Holdings ranked third on the list after having paid a reported $300 million in July to acquire an 8.94 percent stake. Another 6.63 percent of the company is held by directors and executive officers.

The company’s valuation was based in part on the more than RMB 810 million ($115 million) in revenue which Chindata took in during the first six months of this year, according to its prospectus. That revenue figure was up by 73 percent over its pro forma results for the same period in 2019.

During the first half of 2020 Chindata’s net loss attributable to shareholders was just more than RMB 59.4 million, which was down from the RMB 66.2 million shortfall it recorded during the first half of 2019 on a pro forma basis.

The mainland China-based firm exceeded analyst expectations despite deriving 81.6 percent of its revenue in the first half of 2020 from Bytedance, the maker of the controversial TikTok app which has become a prop in this year’s US presidential campaign.

2019 Buyout Leads to 2020 IPO

Bain took control of the mainland China elements of Chindata, which make up the majority of the company’s assets and operations, when it paid $570 million in May 2019 for a controlling stake in what was then the data centre division of Shenzhen-listed network infrastructure provider Wangsu Science and Technology Company.

The US private equity firm had earlier acquired Singapore-based Bridge Data Centres and merged those two operations in July of last year.

The combined company now operates two facilities in Malaysia, including a hyperscale data centre in the country’s Cyberjaya development, and six more hyperscale assets in China. The infrastructure firm has been steadily adding staff in India, and has already announced plans to expand its portfolio into that country.

Data Centres Heat Up During Crisis

While the COVID-19 pandemic has damaged the value of office, retail and hotel properties, the health crisis, along with the social and economic changes that it is driving, have pulled data centres onto centre stage.

Even before the coronavirus began boosting use of video conferencing and upping Netlix streaming, the dawn of 5G networks and other advances were raising demand for remote data access and pulling major institutional investors into the data centre niche.

In Asia Pacific, Gaw Capital just last month announced that it had closed on $1.3 billion in funding for its China-focused data centre platform, with Middle East sovereign fund ADIA becoming a major backer of that venture.

In late August US private equity firm Stonepeak Infrastructure Partners also revealed a data centre initiative in the APAC region. The New York-based firm, which has also invested in US server facilities through its 2017 takeover of Cologix, has now joined with a team of former Equinix executives to set up Singapore-based Digital Edge, and has already raised $1 billion for that venture.