Chinese CDN ChinaCache Sells Data Center Business

Chinese CDN provider ChinaCache has divested a majority stake in its data center business to a group of investors, two of whom are controlled by the CDN company’s chairman and CEO.

The CEO, Song Wang, said in a statement that the transaction will help it focus on its “technology-driven” CDN business, strengthening the balance sheet, and getting out of the capital-intensive data center business.

ChinaCache has offloaded a 79 percent equity interest in the data center business, called Xin Run Technology, to Tianjin Shuishan Technology, Shanghai Qiaoyong Equity Investment Fund Management, and Tianjin Dingsheng Zhida Technology. Song controls Tianjin Shishan, which now owns the biggest stake in Xin Run (nearly 50 percent), and Tianjin Dingsheng, which acquired 5 percent in the data center company.

Qiaoyong is also financing Tianjin Shuishan’s acquisition via a loan.

In depth: How the Chinese Data Center Market is Evolving

The total acquisition price is 221.2 million Chinese Yuan or about US$32.1 million.

Few CDN (Content Delivery Network) providers own their data center infrastructure. The biggest ones, such as Akamai, lease space from colocation providers, since they need points of presence in as many locations as possible but relatively little data center capacity in each individual location.

The CDNs that do own their infrastructure are cloud giants, such as Google and Amazon, who build their data centers for many other purposes besides CDN.

ChinaCache said it may partner with Xin Run on joint solutions in the future.

See also: Chinese Data Center Provider GDS Files for IPO on Nasdaq