Ping An Overseas Holdings Invests $150 Million USD in GDS
by Josh Anderson
SHANGHAI, CHINA — GDS Holdings Limited, a developer and operator of high-performance data centers in China, has announced a $150 Million USD equity investment by China Ping An Insurance Overseas Holdings Limited, a subsidiary of Ping An Insurance Group Company of China. The investment will be in the form of convertible preferred shares. GDS will use the proceeds from the investment to fund expansion of its data center capacity and for general corporate purposes. The transaction is expected to close within ten business days.
“We are delighted to strengthen our strategic relationship with Ping An through this investment,” commented Mr. William Huang, Chairman and Chief Executive Officer of the Company. “We very much appreciate Ping An’s support as an investor in GDS and are honored to count them as one of our top customers. We see great potential to work with Ping An in growing its market-leading technology platforms and ecosystems in key verticals such as fintech, healthcare, auto-services, real estate, and smart cities. Ping An is among the largest and most admired companies in China. We are proud of the trusted relationship we have built with them and are excited to work more closely together in achieving both of our goals.”
Mr. Hoi Tung, Chairman and Chief Executive Officer of Ping An Overseas Holdings, commented, “Over the past 6 years, Ping An has built a fruitful and longstanding relationship with GDS, and we have witnessed their tremendous success in becoming a prominent franchise in the data center industry. Ping An Overseas Holdings’ investment represents yet another vote of confidence in GDS’ capability in being a driving force leading the next wave of technological advancement in China.”
“Ping An Overseas Holdings looks forward to further expanding our partnership with GDS in areas such as financing and real estate. In addition, as Ping An has a strong commitment to our strategy of “Finance + Technology” and “Finance + Ecosystem”, we will also seek to pursue strategic co-operation with GDS in the technology arena.” Mr. Tung concluded.
The investment by Ping An Overseas Holdings in GDS includes the following terms:
- During the first eight years from their issuance date, the convertible preferred shares accrue a minimum 5.0% p.a. dividend, payable quarterly in arrears, in cash or in kind in the form of additional convertible preferred shares, at the option of GDS. As of the eighth anniversary of the issuance date, the convertible preferred shares accrue a 7.0% p.a. minimum dividend, payable quarterly in arrears, in cash only, which dividend rate will further increase by 50 basis points per quarter thereafter for so long as any convertible preferred shares remain outstanding.
- The convertible preferred shares are convertible into GDS’ Class A ordinary shares at the option of their holder, at a conversion rate corresponding to a conversion price of US$35.60 per American depositary shares (“ADSs”), representing a premium of 13.3% to the volume weighted average price of GDS’s ADS for the 30 trading days immediately preceding the signing date, subject to customary anti-dilution adjustments.
- GDS will have the right to trigger a mandatory conversion at its election, beginning on March 15, 2022, provided certain conditions are met, including GDS’ Class A ordinary shares achieving a specified price threshold of 150% of the conversion price for a specified period.
- Holders will not have any redemption right or put option over the convertible preferred shares, except upon the occurrence of a change of control, or GDS’ ADS ceasing to be listed for trading on any of the New York Stock Exchange, the Nasdaq Global Select Market or the Nasdaq Global Market. After eight years, GDS will have certain rights in connection with the redemption of the convertible preference shares at 100% of their face value, and including accrued and unpaid dividends.
In addition, Ping An Overseas Holdings will have the right to designate one non-voting observer to attend any meetings of the GDS Board of Directors, subject to maintaining its shareholding at or above a specified percentage threshold.