Bain Eyes New Backers for Multibillion-Dollar China Data-Center Firm Chindata

Dong Cao and Manuel Baigorri, Bloomberg News

A bundle of fiber optic cables lead to the server room of the Sberbank PJSC data processing center (DPC) at the Skolkovo Innovation Center, in Moscow, Russia, on Tuesday, Dec. 26, 2017. Sberbank PJSC, Russias most valuable company, will boost its dividend payout to 50 percent of profit or higher, just not as quickly as some investors had hoped. Photographer: Andrey Rudakov/Bloomberg , Bloomberg

(Bloomberg) -- Bain Capital is considering bringing fresh backers into Chindata Group Holdings Ltd., people familiar with the matter said, allowing it to raise cash and keep expanding the data-center company.

The US-based investment fund is working with advisers to find partners in some of the data centers, the people said, asking not to be identified because the matter is private. Bain plans to sell ownership rights for the assets to help lighten its balance sheet, while charging maintenance and operation fees, one of the people said.

After taking Chindata private only last year in a deal worth about $3.2 billion, Bain is gauging demand before deciding on the final size and other details surrounding a potential transaction, the people said.

Founded in 2015, Chindata runs what it calls hyperscale data centers in China’s major economic centers: Greater Beijing, the Yangtze River Delta around Shanghai and Greater Bay Area in the country’s south. Chindata also has operations in India, Malaysia and Thailand, its website shows.

Potential investors have shown preliminary interest in some of the company’s assets, but considerations are preliminary and no final decisions have been made, the people said.

Bain could also decide to distribute some of the cash it might raise to its investors via dividends, one of the people said. Founded in 1984, Bain invests in asset classes such as private equity, credit, public equity, venture capital and real estate. It manages about $180 billion in total assets.

A representative for Bain declined to comment.

Chindata’s mainland China assets account for more than 90% of its revenue, according to its financial results. ByteDance Ltd., renowned for its video-sharing platforms TikTok and Douyin, is a key client.

Chindata is expected to generate about $600 million in earnings before interest, tax, depreciation and amortization this year, one of the people said.

Data centers have become hot assets, not least because they are seen to have stable returns and good growth prospects as the world becomes ever more reliant on technology. GDS Holdings Ltd. earlier this week agreed to sell a stake in its data-center business outside of China to a group of alternative asset managers that includes Hillhouse Investment and Boyu Capital for $587 million.

(Updates with background on Bain in sixth paragraph.)