Key Points:
- Shagang and investors are working with advisers on a deal
- The sale follows Global Switch’s scrapped Hong Kong IPO
The owners of Global Switch Holdings Ltd. are exploring a sale that could value the London-based data center operator at 8 billion pounds ($10.9 billion) or more, people with knowledge of the matter said, potentially extending the list of major overseas investment disposals by Chinese investors.
Global Switch, controlled by Chinese steelmaker Jiangsu Shagang Group Co. and backed by Avic Trust Co., is working with advisers to solicit interest from prospective suitors, said the people, who requested anonymity because the talks are private.
The potential sale of Global Switch follows an aborted Hong Kong initial public offering in 2019. In August of that year, Shagang bought another 24% stake in a 1.8 billion-pound deal from British billionaire brothers David and Simon Reuben, who had begun to whittle down their ownership in 2016. Shagang then became the largest shareholder.
In November, Global Switch said Shagang Group planned to transfer its Global Switch stake to its Shenzhen-listed unit, Jiangsu Shagang Co. The move won’t impact Global Switch’s strategic direction, management or financial and operational policies, it said at the time.
A divestment would see Shagang joining other Chinese corporates in unwinding acquisitions of non-core assets they acquired in recent years. HNA Group Co. last month agreed to sell U.S. technology distributor Ingram Micro Inc. for about $7.2 billion, the biggest asset sale for the transport-focused conglomerate. Dalian Wanda Group Co.’s sports unit sold its Ironman triathlon business earlier this year, while China Oceanwide Holdings Group Co. still hasn’t completed a $2.7 billion takeover of U.S. insurer Genworth Financial Inc. after striking a deal in 2016.
Global Switch, founded in 1998 and led by Chief Executive Officer John Corcoran, owns, operates and develops data centers in Europe and Asia Pacific. The company’s footprint currently spans about 390,000 square meters and its tenants include government organizations, mobile carriers and financial institutions, its website shows. The company posted revenue of about 439 million pounds in 2019, according to its annual report.
Deliberations of the sale are preliminary and Shagang could decide to keep the business, the people said. A representative for Global Switch declined to comment, while a representative for Shagang Group didn’t respond to requests for comment.
Data center companies have attracted interest from infrastructure-focused private equity firms, in part due to perception of stable returns and expectations of ongoing growth as people increasingly rely on technology. Sizable data center transactions that closed in 2020 include Digital Realty Trust Inc.’s $8.8 billion purchase of InterXion Holding NV, EQT Infrastructure’s EdgeConneX Inc. acquisition and Macquarie Group Ltd.’s purchase of an 88% stake in Sydney-based AirTrunk.
Source: Bloomberg
