#China #Beijing #Data Centers #VNET Group #Dajia Investment

VNET and Dajia Investment Join Forces to Establish Pre-REITs Fund

In a significant development for the Chinese data center industry, VNET Group, Inc. (Nasdaq: VNET), a prominent provider of carrier- and cloud-neutral internet data center services, has announced a definitive agreement with Dajia Investment Holding Company Ltd. This strategic partnership aims to create a pre-REITs fund focused on investing in hyperscale data centers in mainland China.

The Agreement

Executed on November 28, 2024, the agreement marks a notable collaboration intended to enhance infrastructure investment, especially amid a growing trend among domestic institutional investors to back new infrastructure projects. The fund will emphasize the development of value-driven assets and streamline the investment process for hyperscale data centers, thereby responding effectively to the burgeoning digital economy.

Under the terms of the agreement, the initial investments for this fund will be directed towards the first and second phases of VNET's Taicang IDC Campus. This facility boasts a total Information Technology (IT) capacity of around 210 megawatts (MW) and is valued at approximately RMB 5.74 billion. The significance of this valuation lies in its implied post-closing valuation estimated at about 10.1 times EV/EBITDA, indicating a strong financial positioning for future projects.

VNET will retain a 51% equity interest in the assets associated with the fund while Dajia will hold the remaining 49%. This structure not only signifies VNET's commitment to maintaining a crucial operating role but also ensures that both companies can consolidate and report financial results effectively across their operations, further driving stability and sustainability within the sector.

Insight from Leadership

Josh Sheng Chen, the Founder and Executive Chairperson of VNET, expressed enthusiasm about this transaction. He remarked, “This demonstrates our prowess in effectively managing capital and asset operating cycles while bolstering our capital sources with long-term investors. We will continue to pursue innovative financing structures and explore exit strategies for our existing premium data centers.” Chen's vision underlines the commitment to creating a sustainable capital cycle that underpins VNET's long-term growth and contributes positively to China's digital transformation.

About VNET Group

VNET Group is recognized as a leading internet data center service provider in China, offering an array of hosting services, including IDC, cloud solutions, and business VPN services. The company's infrastructure supports over 7,000 enterprise customers from diverse industries, from internet startups to established financial institutions, demonstrating its broad influence in enhancing the reliability and security of clients' internet frameworks.

About Dajia Investment

Dajia Investment is a wholly-owned subsidiary of Dajia Insurance Group, focusing on high-quality asset management and investments in sectors with substantial growth potential. The company’s investment portfolio includes modern logistics, clean energies, data centers, and more — reflecting its commitment to promoting high-quality infrastructure developments across China.

Conclusion

The joint venture between VNET and Dajia Investment showcases the direction towards which the data center market is evolving, focusing on essential infrastructure that supports the rapidly digitalizing landscape of China’s economy. By creating an innovative pre-REITs fund, both companies aim to tap into the vast potential of hyperscale data centers, paving the way for future growth and significant investment opportunities within the sector.