Bain Capital Eyes $4 Billion+ Windfall from China Data Centre Sale

U.S. private equity giant Bain Capital is reportedly looking to cash in on its Chinese data centre business, WinTriX DC Group, with a potential sale that could value the operation at over $4 billion. Sources familiar with the matter indicate that Bain Capital has enlisted advisors and initiated preliminary discussions with prospective buyers in recent months.

WinTriX’s China arm, previously known as Chindata Group Holdings, is projected to generate close to 4 billion yuan in earnings before interest, taxes, depreciation, and amortisation (EBITDA) in 2025, according to insiders. Neither Bain Capital nor WinTriX have offered any official comment on the potential deal.

This move comes almost two years after Bain Capital took Chindata private in a $3.16 billion transaction. Bain Capital initially entered the Chinese data centre market by acquiring Chindata in 2019 and subsequently merged it with its Southeast Asian data centre platform, Bridge Data Centres, in the same year. The combined entity was then listed on the Nasdaq. However, sources suggest that Bain Capital has since separated the two businesses under the WinTriX umbrella.

The timing of the potential sale is noteworthy,

coinciding with a significant surge in data centre valuations globally, largely fueled by the rapid advancements in artificial intelligence. This trend was highlighted by the recent sale of Australian data centre operator AirTrunk to a Blackstone-led consortium for over 20 times its projected core earnings. In contrast, WinTriX’s competitor in China, GDS Holdings, is currently trading at a price-to-earnings multiple of 8.48, according to LSEG data. It’s worth noting that Fitch Ratings recently downgraded WinTriX’s credit rating, citing concerns about increased business risks due to a shift in strategy towards overseas investment, as well as slower demand and heightened competition in the Chinese market.

Notably, social media powerhouse Bytedance accounted for a substantial 86% of WinTriX’s revenue in 2022, as per the Fitch report. Beyond China, WinTriX also maintains data centre operations in India and Malaysia. In March, its non-China focused unit, Bridge Data Centres, secured a substantial $2.8 billion financing package to support its expansion initiatives. Sources indicate that Bain Capital intends to retain control of Bridge Data Centres for the foreseeable future.

Interesting Fact

Did you know that the world’s first data centre is often attributed to IBM in the 1950s? These early “computer rooms” were a far cry from the massive, sophisticated facilities we see today, primarily housing mainframe computers and requiring significant cooling and specialized personnel. The evolution of data centres has been a fascinating journey, mirroring the exponential growth of computing power and the internet itself!