Bain-Backed Chindata Fielding Preliminary Takeover Interest

(Bloomberg) -- Chindata Group Holdings Ltd., the Chinese data center operator backed by Bain Capital, is attracting takeover interest from industry rivals, according to people familiar with the matter.

Shanghai-based GDS Holdings Ltd. is considering a bid to combine with Chindata, the people said, asking not to be identified because the matter is private. Asian private equity firm PAG, which launched a digital infrastructure platform last year, is separately weighing an offer, according to the people. 

Competitors like EdgeConneX, backed by buyout firm EQT AB, could also study bids for the business, the people said. Chindata’s American depositary receipts jumped as much as 22% in Friday trading, the biggest intraday gain in more than a month. They were up 14% at 11:04 a.m. in New York, giving the company a market value of about $1.8 billion. GDS gained as much as 5.8%. 

Chindata shares have suffered in the past year following China’s crackdown on technology companies. Bain could decide to delay any transaction until Chindata’s stock price bounces back, they said. Chindata’s board hasn’t yet considered any proposal, one of the people said. 

There isn’t currently a formal sale process, and discussions may not proceed to a more advanced stage, the people said. Representatives for Bain, EQT and PAG declined to comment, while spokespeople for Chindata and GDS didn’t immediately respond to requests for comment.

Digital infrastructure assets such as data centers became hot assets during the coronavirus pandemic thanks to demand from video streaming to online gaming. Investor enthusiasm for Chinese technology companies was blunted by regulators, whose campaign to rein in the industry flattened once-high-flying share prices. Chinese companies traded in New York have also been hit by tensions between China and the U.S. over auditing rules.

Bain bought Chindata in 2019 from Wangsu Science & Technology Co. and merged it with its portfolio firm Bridge Data Centres, creating a pan-Asian company operating hyperscale data centers in China, India and Southeast Asia.

GDS, listed both in the U.S. and Hong Kong, has seen its stock drop more than 60% in the last year, valuing the firm at around $5.7 billion. The company had previously explored a combination with GLP Pte’s data centers in China, although talks stalled over valuation, Bloomberg News reported in January.

EQT’s infrastructure arm bought EdgeConneX from an investor group led by Providence Equity Partners back in 2020. Founded in 2009, it is headquartered in northern Virginia, Singapore and Amsterdam. Last year, it made an investment in Chinese data center provider Chayora to access data centers in Beijing, Shanghai and potentially other cities across the country.

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With assistance from Bloomberg