Warburg Pincus And 21Vianet To Form China Data Center Joint Venture

Warburg Pincus and Chinese data center provider 21Vianet Group, Inc. have entered into a strategic investment agreement to form a joint venture to invest in wholesale data centers and built-to-suit data center projects in China, the companies announced.

No financial details were disclosed.

With strong demand for data center space driven by the exponential growth in data usage and cloud services, the joint venture will focus on turn-key data centers, standard modules and built-to-suit solutions. The goal is for the platform to grow to 80,000 to 100,000 cabinets over the next five to seven years.

"Data centers have been one of the best performing real estate asset classes globally and one supported by compelling secular trends in China. We have tracked the sector in China for years and are delighted to collaborate with 21Vianet to form the JV," said Ellen Ng, managing director of Warburg Pincus.

21Vianet will seed the joint venture with four existing high-performing IDC assets valued at over US$300 million. 21Vianet will continue to own 51% of the equity interests in the four existing IDC assets, while Warburg Pincus will own the remaining 49%.

Warburg Pincus will contribute an undisclosed amount of capital and industry resources in the real estate sector.

"As China’s data center industry moves towards increased specialization and verticalization, we firmly believe that the JV will enable us to effectively capture incremental market opportunities from diverse customers and attract more world-class talent," says Steve Zhang, CEO of 21Vianet.

With respect to future projects, 21Vianet will initially own 49% of the equity interests and Warburg Pincus will initially own 51%.

The projects currently under consideration are expected to close in multiple tranches in the first half of 2017.