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Chinese Data Center Provider GDS Files for IPO on Nasdaq

The company expects to capitalize on wave of data center outsourcing and cloud adoption in the Chinese market.

As US-based data center giants are enjoying a favorable stock market, one of their Chinese counterparts wants to enter the fray.

GDS Holdings, which offers data center services from facilities in Mainland China and Hong Kong, recently filed for an IPO with the US Securities and Exchange Commission. The company is hoping to raise up to $200 million through an offering on Nasdaq.

China is a huge growth market for data center providers. The market is still developing, and there are relatively few quality third-party data center options, according to GDS.

There was about 7.4 million square meters of data center space in service in the country in 2015, the company said in its SEC filing. Only 1.2 million of that space is in colocation facilities, and GDS expects to ride a wave of outsourcing, as enterprises increasingly find that they are better off leaving the job of data center operation to specialists like itself.

GDS has a partnership with Aliyun, cloud services arm of the Chinese internet giant Alibaba, which hosts cloud infrastructure in its facilities, and wants to strike similar deals with more cloud service providers, according to its SEC filing.

In addition to outsourcing, the company, which currently serves about 300 customers, expects to benefit from growth of the Chinese cloud services market. Its strategy is to attract cloud service providers as customers to its facilities and offer managed cloud services. Like most of the world’s leading data center providers, it wants to turn its data centers into hubs where enterprises can access cloud services and set up hybrid infrastructure that mixes on-prem servers with cloud.

GDS has six data centers – five in Mainland China and one in Hong Kong – totaling close to 50,000 square meters of data center space in service. It also has more than 30,000 square meters under construction in existing locations and holds about 22,000 square meters of land for development.

See also: Hong Kong: China's Data Center Gateway to the World

Its biggest rivals are state-owned Chinese telcos. The three carriers – China Telecom, China Unicom, and China Mobile – control 59 percent share of the data center services market in the country, GDS said, citing market data by 451 Research.

It differentiates from these competitors mainly by providing access to more than one carrier in its facilities, but there are numerous carrier-neutral data center providers in the market the company is competing with as well. They include domestic providers, such as Sinnet, Dr. Peng, and 21Vianet, and international players, such as US-based Equinix and Japan’s KDDI and NTT.

One of the major investors in GDS is a subsidiary of ST Telemedia, a Singapore-based data center provider that serves clients in Singapore, China, and the UK. ST Telemedia, backed by Temasek Holdings, the Singapore government-owned investment company, recently acquired majority stake in Tata Communications’ data center business in India and Singapore.

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