GDS Nets $385M in DayOne Sale, Fueling China Data Center Push

SHANGHAI, China – January 13, 2026 – GDS Holdings, a leading data center operator in China, has executed a significant capital recycling maneuver, announcing the sale of US$385 million in shares of DayOne Data Centers Limited back to the Singapore-headquartered hyperscale platform. The transaction not only provides GDS with a substantial cash infusion but also highlights the soaring valuations within the global digital infrastructure market, driven by the insatiable demand for artificial intelligence and cloud computing.

According to the announcement, the deal allows GDS to recoup approximately 95% of its original principal invested in DayOne at a remarkable 6.5 times multiple. Even after the sale, GDS retains a formidable stake in the rapidly expanding international operator. The value of its remaining equity in DayOne is now estimated to be over US$2.2 billion, a figure equivalent to US$11.18 per GDS American Depositary Share, based on DayOne's latest funding valuation.

GDS has stated its intention to reallocate the proceeds to pursue “compelling new business opportunities” within its core operations in mainland China, signaling a strategic doubling-down on its home market at a pivotal moment for the industry.

The Hyperscale Gold Rush

The lucrative terms of the GDS-DayOne deal are a direct reflection of a frenzied investment climate for data centers. The share repurchase price aligns with DayOne’s recently closed Series C funding round, which saw the company raise over US$2.0 billion—one of the largest private capital raises in the sector's history. This funding round, which reportedly values DayOne at approximately US$10 billion, was led by existing investor Coatue and attracted a diverse group of global institutions, including Indonesia's sovereign wealth fund, the Indonesia Investment Authority (INA).

DayOne, which rebranded from GDS International at the start of 2025, has successfully attracted premier investors like Hillhouse Investment, Boyu Capital, and SoftBank Vision Fund in previous rounds. The company's aggressive growth strategy is focused on building next-generation, AI-ready digital infrastructure across Asia-Pacific and Europe, with plans to use the new capital to scale its hyperscale campuses in the SIJORI region (Singapore, Johor, Riau Islands), Thailand, Japan, and Finland.

This transaction is emblematic of a broader market trend. The global hyperscale data center market, valued at US$167 billion in 2025, is projected to surge towards US$1.2 trillion by 2033. High-profile deals, such as BlackRock's US$40 billion acquisition of Aligned Data Centers and Bain Capital’s US$4 billion sale of its Chinese data center assets in late 2025, underscore the immense appetite among investors for digital infrastructure assets that form the backbone of the modern economy.

A Masterclass in Capital Recycling

For GDS, the sale is more than just a profitable exit; it is a textbook example of strategic capital management. By nurturing its investment in DayOne (formerly its international arm) and facilitating its growth as an independent entity, GDS created a high-value asset. The company's equity interest was diluted from a majority to a minority 35.6% stake in early 2025 when DayOne completed its Series B funding, allowing GDS to deconsolidate the international business and recognize it as an equity investment.

This latest move to sell a portion of that stake demonstrates a sophisticated strategy of realizing gains from non-core assets to fuel primary growth engines. This pattern is consistent with GDS's recent activities, including a March 2025 announcement to monetize a 70% equity interest in a portfolio of its mature data centers in China through a private REIT structure. That deal was designed to unlock capital while allowing GDS to retain operational control and a 30% stake, providing further liquidity for expansion.

The US$385 million cash inflow significantly strengthens GDS's balance sheet, providing non-dilutive funding for future projects. While GDS posted a reduced net loss and steady revenue growth in its 2024 full-year results, this injection of capital provides substantial firepower to accelerate its development pipeline and solidify its market leadership without taking on additional debt or issuing new equity.

Doubling Down on China's Digital Future

The decision to reinvest the proceeds squarely into its Chinese operations is a calculated bet on a market with explosive growth potential and unique characteristics. China's data center market is the second largest in the world and is projected to grow at a compound annual growth rate (CAGR) exceeding 30% in the hyperscale segment over the next several years, driven by a confluence of powerful factors.

The nationwide push for digitalization, the rollout of 5G networks, and the proliferation of IoT devices are generating unprecedented volumes of data. More importantly, the rapid evolution of AI is creating immense demand for the kind of high-performance, high-density computing infrastructure that GDS specializes in. Strict data localization laws, such as the Data Security Law (DSL) and Personal Information Protection Law (PIPL), mandate that Chinese data remains within the country, making domestic data centers indispensable.

Furthermore, GDS is poised to capitalize on major government initiatives like the "East Data West Computing" project. This national strategy aims to balance the country's digital infrastructure by encouraging the development of large data center hubs in the energy-rich western provinces to serve the data-intensive eastern coastal cities. This policy offers incentives like land grants and discounted energy, creating favorable conditions for large-scale operators like GDS.

Navigating this market also requires adapting to a stringent regulatory environment focused on sustainability. China has set aggressive targets for Power Usage Effectiveness (PUE) and mandates that new national hub data centers source at least 80% of their electricity from renewables by 2030. GDS's track record and focus on high-efficiency, green data centers position it well to meet these requirements. While new rules mandating the use of domestic AI chips in state-funded projects present a challenge, they also underscore the government's commitment to building a self-reliant digital ecosystem—a landscape in which established local leaders have a distinct advantage. The recent opening of data center ownership to foreign entities in select Free Trade Zones may increase competition, but GDS's entrenched position and deep customer relationships with China's largest cloud and internet companies provide a formidable competitive moat.