SHANGHAI - GDS Holdings (NASDAQ:GDS) Limited (NASDAQ: GDS; HKEX: 9698), a prominent data center developer and operator in China and Southeast Asia, announced Monday that its subsidiary, DigitalLand Holdings Limited (GDS International), has attracted $587 million in funding from institutional private equity investors for its Series A convertible preferred shares. This move is aimed at bolstering the company's international expansion independently of its parent entity.
The newly issued Series A shares value GDS International at a pre-money equity valuation of $750 million, roughly $3.92 per American Depositary Share of GDS Holdings. The post-money enterprise valuation, considering forecast net debt, stands at about $2.3 billion, equivalent to around 24 times its projected Adjusted EBITDA for 2025.
GDS International, which was established in 2022 and is headquartered in Singapore, currently possesses a portfolio that includes 330 MW of data center capacity in service or under construction, with an additional 340 MW reserved for future development. Locations span across strategic markets such as Hong Kong, Singapore, Malaysia (Johor), and Indonesia (Batam). The company has already secured over 200 MW of capacity commitments and reservations, with more than 70 MW generating revenue.
The transaction will enable GDS International to fully capitalize its share capital at approximately $1 billion, allowing it to complete its current development portfolio without further funding from GDS Holdings. The proceeds from the Series A issue will also be used to repay shareholder loans and other payables due to GDS Holdings immediately after the closing of the transaction.
Post-closing, GDS Holdings will retain approximately 56.1% of GDS International's equity interest, with the remaining 43.9% held by the investors, including prominent names such as Hillhouse and Boyu. The Series A shares are convertible into ordinary shares of GDS International at the holder's discretion and will automatically convert upon the completion of GDS International's IPO, subject to certain conditions.
William Huang, Chairman and CEO of GDS Holdings and Chairman of GDSI, expressed confidence in the growth opportunities in their markets and the value created for shareholders. The transaction's closing is subject to the satisfaction of customary closing conditions.
The information in this article is based on a press release statement.
InvestingPro Insights
As GDS Holdings Limited (NASDAQ: GDS; HKEX: 9698) positions itself for further international growth, the InvestingPro metrics and tips provide a deeper analysis of the company's financial health and market position. With a market capitalization of 60.25 million USD and a P/E ratio sitting at 14.15, GDS Holdings appears to be valued reasonably in the market. Notably, the adjusted P/E ratio for the last twelve months as of Q3 2024 is 13.48, suggesting a slight improvement in earnings valuation over time.
InvestingPro Tips highlight that GDS Holdings has raised its dividend for 7 consecutive years and has maintained dividend payments for 13 consecutive years, which could be a signal of the company's commitment to returning value to shareholders. Moreover, the company's stock is known to trade with low price volatility, which might appeal to investors seeking stability in their investments. For those interested in exploring more, there are additional InvestingPro Tips available, including insights on the company's cash position and valuation multiples. Visit https://www.investing.com/pro/9698 for a comprehensive list of tips and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Looking at the dividend yield, it stands at 3.47% as of the latest data, which could be attractive to income-focused investors. The company's stock is also trading near its 52-week high, at 96.08% of the peak price, reflecting strong market sentiment and a robust return of 31.89% over the last year. These metrics, when coupled with the company's strategic investments and expansion plans, suggest that GDS Holdings could be a compelling consideration for investors monitoring the tech and data center sectors.
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