US-Listed Data Center Giant GDS Weighs Hong Kong Secondary Share Sale

Manuel Baigorri and Vinicy Chan (Bloomberg) -- GDS Holdings Ltd., a Chinese data center company traded on the Nasdaq, is considering selling shares in Hong Kong as early as this year, following in the steps of U.S.-listed Chinese firms like NetEase Inc. and JD.com Inc., according to people with knowledge of the matter.

GDS is working with investment banks on the potential transaction, which could raise about $1 billion for the Shanghai-based firm, the people said, asking not to be identified because the matter is private. Deliberations are preliminary and both the timing and size of the deal could still change, the people said.

A representative for GDS declined to comment on the matter.

Founded in 2001, GDS develops and operates data centers in major Chinese cities such as Beijing, Shanghai and Guangzhou, according to its website. Its customers include internet companies, financial institutions, telecommunications carriers and IT services providers as well as other local and multinational firms.

The company debuted in the U.S. in 2016. Its shares have risen nearly 46% this year, giving it a market value of about $11.4 billion.

A secondary listing in Hong Kong would see GDS follow the blockbuster deals of e-commerce giant JD.com and NetEase, China’s second largest gaming company. Last week, JD.com, which is also listed on the Nasdaq, raised $3.9 billion in its Hong Kong equity sale. NetEase Inc. raised $2.7 billion in its Hong Kong offering earlier this month.

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The listings are a positive sign for Hong Kong, coming after China passed a national security law for the city that critics fear could jeopardize its status as a global financial hub. They follow Alibaba Group Holding Ltd.’s $13 billion stock sale in Hong Kong last year, which was hailed as a homecoming for Chinese companies listed overseas.

--With assistance from Emma Dong.