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Could Global Switch be sold for $8 billion?

Written by Wed 7 Dec 2022

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British-based data centre company Global Switch could be sold in an $8 billion deal with bidders.

Two people with direct knowledge told Reuters that binding offers for the are due by mid-December. Private equity firms PAG, KKR & Co. and Europe-based EQT are said to be in the final round of bidding.

$2 billion short of original valuation

In May 2022, a formal sale process of Global Switch valued the Chinese-controlled data centre company at approximately $10 billion. Around 10 private equity firms and data companies were believed to be part of the original bidding.

Bloomberg reported in November 2021 that data centre operators Digital Realty and Equinix expressed preliminary interest, as well as data centre investor DigitalBridge Group.

At $8 billion, the current valuation would still be one of Asia’s largest ongoing transactions in 2022. However, the anonymous sources expect the agreement to be sealed in 2023.

Global Switch said in June that its shareholders were exploring a potential divestment, appointing JP Morgan, Morgan Stanley, UBS and CITIC Securities to advise on the sale.

With more people and businesses going online, data centres have become an attractive investment, bringing stable returns and high potential for growth.

Global Switch is controlled by shareholder Jiangsu Shagang Group, which first indirectly invested in 2016. The Chinese steelmaker became the largest shareholder after acquiring a further 24% stake for £1.8 billion in 2019, making a valuation of £7.5 billion ($9.1 billion).

Global Switch’s earnings before interest, tax, depreciation and amortization reportedly reached $298 million in 2021 with $495 million in revenues.

Founded in 1998, Global Switch operates 13 data centres across Europe and Asia Pacific, spanning 428,000 square meters.

Read more: Data centre and cloud providers show mixed results for Q3 2022

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Written by Wed 7 Dec 2022

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