Zhang Yiming's supplier sold for 28 billion.

According to investment circle news, on the evening of September 10, Bain Capital announced that its portfolio company in the data center sector, WinTriX DC Group, had reached an agreement with a syndicate led by Shenzhen Dongyangguang Industry & Development Co., Ltd. (hereinafter referred to as "Dongyangguang Group") to sell all of its equity in its Chinese business (i.e., "Chinadata Group").

The deal, worth $4 billion (approximately 28 billion RMB), has become the largest merger and acquisition transaction in the Chinese data center industry to date.

Looking back, Bain Capital's series of operations are impressive: Six years ago, it acquired shares in Chinadata Group for approximately 1 billion RMB, and then injected an additional $570 million. Later, Chinadata Group successfully went public in the United States, and Bain Capital recovered most of its investment. In August 2023, Bain Capital announced the privatization of Chinadata Group, acquiring all of its outstanding shares for 22.8 billion RMB.

Two years later, Bain Capital sold its shares for 28 billion RMB, securing its profits.

The Birth of a 28 - Billion - RMB Merger

A Smart Exit for the PE Firm

According to the announcement, the transaction is divided into three parts - First, listed company Dongyangguang and its controlling shareholder, Shenzhen Dongyangguang Industry, respectively signed "Capital Increase Agreements" with Dongshu No. 1, planning to increase its capital by 3.5 billion RMB and 4 billion RMB. After the capital increase, they will hold 46.67% and 53.33% of the equity in Dongshu No. 1 respectively.

Second, Dongshu No. 1 will inject the above - mentioned funds into its wholly - owned subsidiary, Shanghai Dongchuang Future Data Co., Ltd. (hereinafter referred to as "Dongchuang Future"). Meanwhile, Dongchuang Future has signed a merger and acquisition loan contract with the syndicate.

Finally, Dongchuang Future plans to contribute the capital and relevant loans to its wholly - owned subsidiary, Dongshu No. 3, which will be the final transaction entity to acquire 100% of the equity in Chinadata Group's Chinese business.

The relevant assets of Chinadata Group's Chinese business in this transaction mainly consist of eight companies, including Wutong Digital Technology, Hebei Sidaoge Data Technology, and Hebei Qinshu Information Technology. After evaluation, the total equity value of Chinadata Group's Chinese business is 29.093 billion RMB, and the transaction price for 100% of its equity is 28 billion RMB.

The announcement specifically points out that Dongshu No. 1 will further introduce other investors to raise funds for the acquisition. After the transaction is completed, Dongyangguang's shareholding ratio in Dongshu No. 1 will not exceed 30%. This means that the transaction adopts a structure of "fixing the price first and then raising funds" - while ensuring control, it also leaves sufficient room for subsequent capital operations. Calculated in this way, the participation amount of other transaction parties may be no less than 4.1 billion RMB.

The buyer, Dongyangguang, may not be well - known to the outside world. In 1997, Zhang Zhongneng from Dongyang, Zhejiang, started a business in Shenzhen, starting from electronic new materials. Now, his group owns two listed companies, Dongyangguang and Dongyangguang Medicine.

Dongyangguang explained the reason for this move: It aims to respond to the national deployment of promoting the development of the artificial intelligence industry. Based on its optimism about the prospects of the data center industry, it intends to expand its business boundaries and cultivate new growth curves.

Actually, there have been signs of this for a long time.

As early as May this year, there were reports that Bain Capital planned to sell Chinadata Group's Chinese business and was in talks with potential buyers, with the transaction valuation exceeding $4 billion.

Bain Capital was founded in 1984 and manages nearly $185 billion in assets. It established its first office in Asia in 2006 and has been active in the Asian market ever since. Currently, Bain Capital has offices in Shanghai, Hong Kong, and Guangzhou.

Counting back, Bain Capital has a deep - seated relationship with Chinadata Group. In 2019, Bain Capital spent approximately 1 billion RMB to acquire shares in Chinadata Group from EdgeCast Networks. Then it invested another $570 million, setting a record for the largest single - financing amount in the domestic data center industry. Subsequently, Chinadata Group successfully listed on the US stock market, and Bain Capital recovered most of its investment by transferring old shares before the listing, showing its sophisticated approach.

Until August 2023, Bain Capital announced a privatization agreement with Chinadata Group, acquiring all of its issued shares at a price of $8.60 per ADS, with a total valuation of approximately 22.8 billion RMB.

Now, two years later, Bain Capital is about to pocket 28 billion RMB, a considerable return, making it a smart exit.

"The development of Chinadata Group fully reflects Bain Capital's investment philosophy of collaborating with an outstanding management team to build a pioneering infrastructure platform," said Zhu Jia, Partner and Chairman of Bain Capital in China. He believes that Dongyangguang will continue to leverage its strong industrial capabilities on this basis to drive Chinadata Group into a new stage of development.

The Largest Customer

Zhang Yiming's Supplier

What's the background of Chinadata Group?

Its founder, Ju Jing, is an experienced professional in the field of computing power. He graduated from Beihang University in his early years and was involved in the development of dozens of large - scale data center park projects before starting his business. In 2015, Chinadata Group was officially established. In the early days, it developed in a "front - store, back - factory" model, constructing data centers around the Beijing - Tianjin - Hebei region, the Yangtze River Delta, and the Guangdong - Hong Kong - Macao Greater Bay Area, with Beijing, Shanghai, and Shenzhen as the cores.

Put simply, a data center, or IDC, is a "large - scale computer room" for the Internet, used to store, process, and distribute massive amounts of information. The business model of third - party IDC companies is to invest in the construction of computer rooms in the early stage. After the construction is completed, they charge rent and fees for value - added services based on the bandwidth, cabinets, and other resources used by customers.

In 2016, EdgeCast Networks, which focuses on cloud distribution and edge computing, entered Chinadata Group. However, due to concerns that the IDC heavy - asset model requires a large amount of upfront investment and has a long pay - back period, it withdrew two years later. At that time, Bain Capital took over.

At that time, Bain Capital was full of confidence in the prospects of Chinadata Group, stating that the information infrastructure industry is a technology - intensive and capital - intensive industry, "This is just the beginning."

After that, Bain Capital injected hundreds of millions of dollars and merged Chinadata Group with Southeast Asian data center operator Bridge Data Centres. In 2020, it promoted the merged entity to list on the NASDAQ. On the day of the IPO, Chinadata Group's market value reached $5.8 billion. Based on Bain Capital's 49.1% stake at that time, its holding value reached approximately $2.85 billion, making a huge profit compared to its previous investment.

Now, as a third - party operator of large - scale computing power infrastructure solutions, Chinadata Group has formed a computing power infrastructure network covering the Beijing - Tianjin - Hebei region, the Yangtze River Delta, the Guangdong - Hong Kong - Macao Greater Bay Area, and the northwest regions such as Zhongwei and Qingyang. It is one of the largest AIDC operators with the largest operational scale at the "Eastern Data, Western Computing" hub nodes.

Throughout its development, Chinadata Group has relied on its largest customer, ByteDance.

Around 2018, ByteDance's Douyin app took off, driving the rise of Chinadata Group. According to the financial reports, from 2018 to 2020, the revenue contributed by ByteDance to Chinadata Group increased from 33% to 82%, making it the core pillar of Chinadata Group.

The company's performance also soared. In 2018, Chinadata Group's revenue was 98.48 million RMB, and in the following year, it reached 853 million RMB, a year - on - year increase of 766%. By 2022, Chinadata Group's total revenue soared to 4.55 billion RMB. Bain Capital admitted that the company's growth is linked to the popularity of Toutiao and Douyin.

However, the close relationship with ByteDance has also brought some doubts and concerns. Some analysts questioned at the earnings conference whether there are other potential customers with large demand besides ByteDance. In response, Chinadata Group said that it is working hard to obtain orders, and ByteDance remains a very important customer for the company.

It is precisely because of its large orders from ByteDance that Chinadata Group has always been in high demand.

At the end of 2022, founder Ju Jing left, and Chinadata Group became the only Chinese concept stock listed company fully and substantially controlled by a foreign fund at that time. The following year, Bain Capital attempted to privatize Chinadata Group. Unexpectedly, China Merchants Capital suddenly stepped in and made an offer worth $3.4 billion.

Facing the higher offer, Bain Capital quickly responded, saying that it did not intend to sell the shares it actually owned in the company to any third party. Eventually, Bain Capital won, ending this "battle." After delisting, Chinadata Group was renamed WinTriX DC Group, and its domestic and overseas businesses were separately operated under WinTriX.

However, after all these twists and turns, in this transaction, Chinadata Group has finally returned to the hands of a domestic enterprise.

The Next Super Battlefield

The data center can be regarded as the heart of the AI system.

As is well - known, the development of AI depends on three major elements: computing power, algorithms, and data. AI technologies, especially cutting - edge applications such as large language models and generative AI, need to process massive amounts of parameters and complex operations, and the power consumption required for these calculations far exceeds that of the past. Therefore, AI is also known as a "power - guzzler."

Data centers are like power plants of the digital civilization. In this complex operation system, they have become the "physical foundation" of AI - not only providing indispensable computing power support to avoid operation interruptions due to insufficient hardware or environmental fluctuations but also serving as the storage place for massive amounts of training data. As a unified platform for computing and storage, they have become an efficient hub for the AI computing process.

Simply put, the competition in AI is first and foremost a competition in computing power, and the competition in computing power is directly reflected in the competition in the scale and quality of data centers.

With the surging wave of artificial intelligence, currently, whoever builds and controls the most advanced and largest - scale AI data centers will gain the initiative in the global AI competition. Therefore, the data center market is facing dual opportunities of an explosion in computing power demand and a re - evaluation of asset values.

Not long ago, GLP announced the completion of the fundraising for its first Chinese data center income fund, with an investment scale of approximately 2.6 billion RMB. This is GLP's first investment strategy themed on data centers. GLP revealed that the new fund plans to invest in the GLP data center park in the largest data center cluster in the Beijing - surrounding area. GLP's move is a bet on the hunger for computing power of AI companies in the next decade.

Blackstone is also not far behind. In 2021, Blackstone acquired listed data center company QTS for $10 billion. In 2024, Blackstone further sounded the horn, acquiring Asia's largest data center operator, AirTrunk, for $16 billion, setting a new record for the largest transaction in the industry.

Another impressive case is Hillhouse Capital and GDS Holdings Limited.

In 2020, Hillhouse Capital reached an agreement with ST Telemedia (one of GDS's major shareholders at that time), spending more than 5 billion RMB to acquire some shares in GDS. At the same time, Hillhouse Capital also subscribed for convertible bonds issued by GDS, with a total amount of approximately $505 million. This investment was like "timely help in the snow," providing crucial ammunition for GDS's expansion. Last year, Hillhouse Capital invested in GDS's international business subsidiary, GDS International, which is responsible for international data center assets and operations.

Looking at the domestic market, the scale of the Chinese data center market is expected to grow by $274 billion (approximately 1.9 trillion RMB) from 2025 to 2029, with a compound annual growth rate (CAGR) of over 38% - a trillion - level super track is emerging.

This article is from the WeChat official account "Investment Circle" (ID: pedaily2012). The authors are Wang Lu and Yang Jiyun. It is published by 36Kr with authorization.