Global Switch sells 49% stake to Chinese investors for £2.4bn
Global Switch, the London-based data centre company, has sold 49% of its business to a consortium of Chinese investors, called Elegant Jubilee, for £2.4bn.
Global Switch owns and operates carrier and cloud, neutral data centres across Europe and Asia-Pacific. The company claims that the money raised by the deal will be used to expand its operations, in particular by accessing the fast-growing telecommunications and internet provider customers to support their growth outside of China.
The consortium, comprised of high quality, private sector Chinese corporate and institutional investors, has made a strategic investment into Global Switch to give it common control of the Company alongside the existing sole shareholder, Aldersgate Investments Limited, a Reuben Brothers company. The consortium is paying cash consideration of £2.4 billion for the 49% stake.
Aldersgate Investments Limited, the shareholder company, owned by the Reuben brothers, will now jointly control the Global Switch with Elegant Jubilee.
The Elegant Jubilee consortium was formed by Li Qiang, who is a major shareholder in Chinese data centre company Daily-Tech Beijing whose biggest investor is the Jiangsu Sha Steel Group, the largest private steelmaker in China.
Mr Li Qiang said: “We are tremendously excited to be investing in Global Switch, which has grown to become one of the world’s leading data centre companies. We believe that bringing together the high-quality data centres and operational excellence of Global Switch with the rapidly growing demand from Chinese customers creates a perfect match that will deliver significant future growth opportunities. On behalf of the investing consortium, we are delighted to be partnering with the Reuben Brothers and the Global Switch management team to grow the business strategically and to take it to the next stage of its development.”
John Corcoran, Chief Executive Officer of Global Switch, said: “This investment will continue to open up opportunities for Global Switch to become the data centre provider of choice for new customers from across the globe, and especially Chinese companies growing in Asia and Europe and Western companies growing in China.”
Global Switch will build a new data centre in Shanghai in a joint venture with Daily-Tech, a well-worn route for Western companies to gain access to the Chinese market and one which could soon become even more difficult as cyber security laws mature.
Global Switch also announced major deals in Hong Kong and Singapore, illustrating the benefits of the transaction and the scope for future growth. For these pre-commitments, China Telecom Global will, upon construction completion, become the end customer in Hong Kong and Singapore through direct service agreements with Daily-Tech. These pre-commitments are among the largest customer commitments made in the global data centre industry and will provide further asset and revenue diversification for Global Switch.
Donald Tan, Executive Vice President Network Operations at China Telecom Global, said: “Global Switch’s new state of the art data centres in Hong Kong’s Tseung Kwan O and Singapore’s Woodlands will provide the secure, resilient, centrally located facilities that we require to provide services to our customers, which include international carriers and multinational corporates. We look forward to working with Global Switch and to the significant long-term benefits this partnership will deliver for our business and customers.”
Based on the first of these pre-commitments, Global Switch has already begun construction of its new 100 MVA world-class data centre in Hong Kong, located on the Tseung Kwan O (TKO) Science and Technology Park. The data centre is close to the Hong Kong Stock Exchange and HSBC data centres, as well as the TKO submarine cable landing station, and provides low latency connectivity to all major business districts in Hong Kong. Daily-Tech’s pre-commitment covers data centre services, including managed and cloud enabling services, to be provided from the first stage of the new TKO data centre, comprising two of the five buildings to be constructed. Completion of the first stage is planned for mid-2017 with further stages coming onto the market progressively. Once all stages are complete, the data centre will become the largest carrier-neutral data centre in Hong Kong.
The £2.4bn deal for the Reuben Brothers business was criticised by UK politicians earlier this year when they spoke of nervousness over Chinese corporations having control over the UK’s digital infrastructure.
Ahead of the sale, the former UK foreign secretary and former head of Parliament’s intelligence and security committee, Sir Malcolm Rifkind, and Labour peer Lord West of Spithead raised concerns over Chinese access to the data centres.
Global Switch has downplayed the matter, saying that the investors will not have access to the data centres. The company said that it was more like a real estate business and that it would continue to comply with the UK Centre for the Protection of National Infrastructure, The Financial Times said.