GDS Well-Placed to Capitalize on Growing Data Center Demand From AI in China
We expect GDS Holdings to continue to purchase and build data centers in and around its focus Tier 1 Chinese cities of Shanghai, Beijing, Shenzhen, Guangzhou, Hong Kong, Chengdu, and Chongqing. As its network of interconnected data centers grows, it can more easily cater to the demand from its key cloud service provider customers, allowing them to expand in a flexible way in their key markets. This also enables key enterprise customers to deploy their hybrid clouds in proximity to the networked nodes of leading public clouds. The company is also excited about its international expansion into Southeast Asia, but in raising funds for the growth of this business, named DayOne, it has sold down its stake to 38% and has now deconsolidated this business. The most recent capital raise would value GDS' stake at USD 1.3 billion or USD 6.75 per ADR on a USD 400 million investment. Management has indicated that an IPO of this business is a possibility within the next 18 months. In July 2025, GDS listed a C-REIT seeded by some of GDS' mature Chinese data centers and will likely continue to use this as a means for recycling capital.
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