GDS Holdings is considering raising around RM10 billion (S$3 billion) in loans for its data centre operation in Malaysia, people familiar with the matter said, in what would be one of the largest financing for such a project in Asia.
GDS is working with banks to arrange for the borrowing that will be used to build out operations of its unit GDS International in Malaysia, the people said, asking not to be named discussing a private matter. The Shanghai-based company is also considering an initial public offering of the unit as soon as next year, the people said.
Deliberations are at early stage, and details including the loan and potential IPO plan could still change, the people said. A representative for GDS did not immediately respond to a request for comment.
Malaysia is turning into a beneficiary of Asia’s growing need for data centres to support the boom in artificial intelligence development and services. Demand for such infrastructure is projected to increase 25 per cent a year through 2028, according to Cushman & Wakefield data, compared with 14 per cent in the US. Tech companies are also diversifying beyond China to reduce geopolitical risks amid tensions between Beijing and Washington.
In May, Microsoft pledged to invest US$2.2 billion to build digital infrastructure in Malaysia. In July, a data centre operator owned by Bain Capital raised a US$490 million five-year loan to refinance outstanding debt for a Malaysian unit.
Private equity firms that traditionally focused on China are increasingly shifting their attention to other areas like South-east Asia, a fast-digitising region of more than 650 million people. In February, Hillhouse bought Singapore-based business services provider InCorp Global from private equity firm TA Associates for an undisclosed amount.
Malaysia is an important market for GDS’s overall ambition to expand in South-east Asia, the people said. The cost of operating data centres in the country is generally lower, while such operations can support business growth in nearby countries including Singapore, they added.
GDS, which is listed in Hong Kong and New York, earlier raised several hundred million US dollars this year for the unit by selling a stake. It is seeking to raise as much as US$1 billion in additional investment for GDS International, which was established in 2022, Bloomberg News reported earlier this month. BLOOMBERG
