South Korean conglomerate SK Holdings has acquired an 8.9 percent stake in hyper-scale digital real estate operator Chinadata Group. The parent company of SK Group bought the stake in the Bain Capital-backed data center for $300 million.
According to sources with knowledge in the matter, the stake acquisition valued the Chinese data center operator at around $3.1 billion. The same sources, who requested anonymity as they were not authorized to discuss the deal publicly, claimed that the transaction was still subject to regulatory approval. If both companies do get regulatory approval, the transaction could be completed as early as the end of the third quarter this year. SK Holdings reportedly appointed Deutsche Bank to become its sole financial adviser for the transaction.
SK Group, South Korea's third-largest conglomerate, is involved in multiple industries including chemicals, logistics, energy, semiconductors and telecommunications. The latest stake acquisition is expected to further expand the company's involvement in the cloud and data center space. SK Group already holds significant investments in the sector at home, including large stakes in six data centers with a combined in-service capacity of over 100 megawatts.
Chinadata Group, which was founded in Beijing in 2015, is considered to be the world's first hyper-scale data center provider. It provides its digital ecosystem solutions to major companies in China, India, and several countries in Southeast Asia. The company currently operates major data centers in Beijing and other cities along China's Greater Bay Area and the Yangtze River Delta.
The Chinese company was acquired by American private investment firm Bain Capital from Wangsu Science and Technology Company in 2019. The acquisition was part of a wave of investments by private equity firms in Chinese data centers last year, which was mostly initiated by China's rapid adoption of 5G network technologies and e-commerce. Since then, Bain Capital had invested more than $570 million into the business. It then merged the company with Bridge Data Centers in July last year.
Chindata's founder and chief executive officer, Alex Ju, previously mentioned that the company is aiming to become one of the largest sustainable data center solutions providers in the world. Through its continued efforts, the company aims to have all of its data centers run on 100 percent renewable energy within the next few years.
In January, reports claimed that Chinadata was in talks with a group of banks that included Morgan Stanley, Credit Suisse and Citigroup for a possible initial public offering in the United States. No new updates have since emerged regarding its alleged IPO plans.