Temasek-backed ST Telemedia is said to consider selling stake in data centre operator GDS: sources

ST Telemedia (STT) is considering selling its holding in Chinese data centre operator GDS Holdings, people familiar with the situation said.

The company, backed by Singapore state investor Temasek Holdings, holds almost 34 per cent of GDS’ Class A shares, representing about 20 per cent of aggregate voting power, the latest GDS annual report shows.

ST Telemedia is sounding out interest from potential buyers for the entire stake, the people said, asking not to be identified as the deliberations are private.

Data centres are in strong demand globally, thanks in large part to the artificial intelligence boom. That has reflected in the share price of GDS, which is up almost 60 per cent in Hong Kong this year and more than 220 per cent over the past 12 months. The company has a market value of around US$7.4 billion.

The rally in GDS, which also has American depositary receipts, could make it harder for ST Telemedia to find a buyer for its stake, the people said, adding that it may offload the holding in blocks. The company may also decide not to sell, they said, noting that deliberations are at an early stage.

ST Telemedia declined to comment. GDS did not respond to requests for comment.

Singapore-headquartered ST Telemedia invests in communications, media, data centres and infrastructure technology businesses. ST Telemedia also owns one of Asia’s largest data centre operators, ST Telemedia Global Data Centres. Bloomberg News reported in July that KKR is in talks about potentially buying STT GDC in a deal that could value the firm at more than US$5 billion.

Meanwhile, GDS has a presence beyond mainland China with a stake in DayOne Data Centers Singapore Pte, which runs facilities in Hong Kong, Tokyo and South-east Asia. DayOne is considering an initial public offering in the US, Bloomberg reported in February.

GDS posted revenue of US$375 million for the quarter through March, with net income of US$105 million, reversing a US$48 million loss a year earlier. BLOOMBERG