21Vianet Group and private equity firm Warburg Pincus agreed to form a joint venture to establish a wholesale data center platform in China.
The pair signed a strategic investment deal to form the JV and establish a digital real estate platform in China, to pursue development and acquisition opportunities in the wholesale and built-to-suit segments of the country’s data center market.
21Vianet, a carrier-neutral internet data center services provider in China, is set to seed the JV with four existing internet data center assets, which are valued at over $300 million.
After the transaction closes, 21Vianet will own a 51% stake in the four data centers, and Warburg Pincus will own the remaining 49%.
Warburg Pincus will contribute direct capital and its extensive network of contacts and resources in the real estate sector. Future projects developed by the JV will see the balance of ownership reversed, with Warburg Pincus taking a 51% equity interest in future facilities.
The JV will serve as a dedicated vehicle that focuses on wholesale customers and enterprises and an expanded product offering across turn-key data centers, standard modules and built-to-suit solutions.
With the partnership, the two companies aim to tap into a strong demand for data center space driven by the exponential growth in data usage and cloud services. The goal is for the platform to grow to 80,000 to 100,000 cabinets over the next five to seven years, the companies said.
The JV agreement is expected to close in the first half of 2017.