Real estate private equity firm Gaw Capital Partners announced today that a fund under its management has formed a joint-venture partnership with Centrin Data, an Internet Data Center (IDC) developer and operator, to acquire, develop and operate a portfolio of hyper-scale Internet Data Center projects in China.
Gaw Capital will provide expertise in investment underwriting and transaction structuring, project development and management, project financing, corporate governance and capital markets to support future operations, while Centrin Data will focus on site sourcing, Internet Data Center design, leasing, operation and financing of the data center, as well as customer service for clients, including government entities, conglomerates and internet companies.
Humbert Pang, Managing Principal and Head of China for Gaw Capital Partners, said, “Gaw Capital Partners is extremely pleased to form a JV partnership with Centrin Data, one of the first and most successful data center operators in China. We strive to build a robust data center platform that services the needs of businesses and the wider public, combining Centrin’s reputation and experience in the sector with Gaw Capital’s expertise in real estate investing in China.”
“We are delighted to be investing in this exceptional investment opportunity, given that China’s total internet traffic growth rate is expected to grow exponentially in the coming years due to the launch of 5G. The launch of the new data center fund reflects our confidence in data center assets in China. High barriers to entry and demand-supply imbalance makes IDCs near tier-1 cities a very scarce asset. In China, there is an abundant supply of data centers in relatively remote areas, but most of the demand comes from tier-1 and tier-2 cities along China’s eastern coastal line. Geographical demand and supply imbalance make IDCs near tier-1 cities a valuable asset with stable rental income.”
The first seed project is the Huaqiao Project located in Kunshan, Jiangsu, which is in close proximity to Shanghai – 40km away from Shanghai city center.
This Internet Data Center project is directly linked to Shanghai’s ‘National Level’ internet exchange point, which enables superior network connectivity with low latency time.
The project consists of two phases with a GFA of 300,000 sqm in total. Phase I is currently occupied by a top-tier internet company with 6,400 data center racks available. In Phase II, no less than 25,600 racks will be offered to the potential customers upon its completion in the early 2020s.
Centrin Data is an industry-leading Internet Data Center infrastructure provider of integrated IT services, with over 14 years of experience in China’s internet and data services sector. It has established a long-term strategic relationship with relevant government authorities, suppliers and clients, and has strong capabilities in terms of securing the most valuable resources and electricity for IDC development and operation.
Currently, Centrin Data has four Internet Data Center projects under management in Beijing; Huaqiao, Jiangsu Province; Wuhan, Hubei Province; and Yantai, Shandong Province, which collectively host more than 20,000 operational data center racks with a further 55,000 racks under construction in the pipeline. Most of the existing data centers are leased to government services, as well as companies in the TMT, banking and insurance sectors.
Gaw Capital is raising an “IDC Fund”, which will target investment opportunities in China’s Internet Data Center assets. The launch of this new fund reflects increasing investor demand for data center assets in China, thanks to technological advancements in 5G communications, 4K transmission, the Internet of Things (IoT) and artificial intelligence. There is an ever-growing amount of data traffic that is driving demand for data centers to consolidate servers, store data and manage network support.
Christina Gaw, Managing Principal and Head of Capital Markets for Gaw Capital Partners, said, “We see significant opportunities in the IDC sector, which is fast becoming a major theme in China as the country deepens its embrace of advanced technology. We sincerely thank our investors for the support and confidence they have given us to growing this platform.”
Gaw Capital has over 13 years of experience investing in and turning around commercial properties in Greater China, including Hong Kong. The firm successfully transformed and repositioned properties such as Sky Bridge HQ, a mixed-use project located in the heart of Linkong Economic Park, Ocean Towers, a 25-storey Grade A office building strategically located in People’s Square and four premium Grade A office buildings (Block A, B, C, & D) at Shanghai MixC, 1799 Wuzhong Road in Shanghai.
In recent years, the firm also purchased 29 local Hong Kong shopping malls from Link REIT, which it intends to reposition and revitalize into attractive hubs of community life. Gaw Capital has also successfully developed a sizable logistic platform, medical-asset backed platform, mini-storage platform, premium outlet malls and education-related platform in recent years to help support the growth and management of these assets.
Mr Paul Ho, chief mortgage consultant at iCompareLoan, said: “the joint venture agreement for the internet data centre makes good business sense. As Centrin Data has over 14 years of experience in China’s internet and data services sector, the risks of investment are also lower.”
A recent research by Cushman & Wakefield (C&W) said that North America is the largest co-location data centre by market size at US$17.2 billion currently but the Asia Pacific region is expected to take over the top position by as early as 2021. The total market size for Asia Pacific co-location data centres is forecast to be around US$28 billion by 2024, 20 per cent higher than the US$23.4 billion market size of North America.