Chinese data centre operator VNET Group, Inc. (Nasdaq: VNET), formerly known as 21Vianet, has signed a master joint venture investment agreement with an unnamed sovereign wealth fund to form joint ventures (JVs) to pursue development and investment opportunities in multiple build-to-suit hyperscale data centre projects in China.

Pursuant to the master agreement, VNET said it will establish individual project companies to undertake the development of each data centre.

Upon completion of the development of each data centre, VNET will transfer 49% equity interest in each project company subject to certain conditions. VNET will hold the remaining 51% equity interest of each project company.

Meanwhile, VNET will also provide management and operating services to all the JVs. The first targeted capital commitments from VNET and the partner in respect of the investments under the Master Agreement are expected to reach RMB 5 billion (US$785.3 million).

The Tech Capital has reached out to VNET for more information and will update this article accordingly.

Samuel Shen, Chief Executive Officer of VNET, said: “We are excited to partner with the sovereign wealth fund to form joint ventures for the development and operation of multiple hyperscale data centre projects in China.

“As the entire market maintains its ongoing trend towards digitalization, the demand for hyperscale data centres continues to show strength.

“These joint ventures will serve as dedicated vehicles focusing on the development and operation of build-to-suit data centres in China, allowing us to capitalize on growing data centre demand and further strengthen our market position.”

The data centre market value in China is set to grow by $55.30 billion, progressing at a CAGR of almost 24% during 2021-2025, according to Technavio.

Strong quarter

VNET has recently published its quarter three results for 2021 with net revenues in increasing by 25.3% to RMB1.56 billion ($242.2 million) from RMB1.25 billion in the same period of 2020.

Adjusted EBITDA (non-GAAP) in the third quarter of 2021 increased by 22.2% to RMB450.4 million ($69.9 million) from RMB368.5 million in the same period of 2020. Adjusted EBITDA margin (non-GAAP) in the third quarter of 2021 was 28.9%, compared to 29.6% in the same period of 2020.

As of September 30, 2021, the company had a total cabinet count under management of 65,264, compared to 62,876 as of June 30, 2021, and 51,476 as of September 30, 2020.

Tim Chen, Chief Financial Officer of the company, said: “We delivered a milestone financial performance this quarter with strong top- and bottom-line growth. Despite regulatory uncertainties, both our net revenues and adjusted EBITDA during the third quarter exceeded the high end of our guidance range, increasing by 25.3% and 22.2% year over year respectively.

“Our strong growth was derived from our unique mix of wholesale and retail IDC solutions, and increasing demand driven by the ongoing digital transformation. As we continue to execute our growth strategies, prudently leverage our healthy balance sheet, and broaden our sector coverage, we will continue to deliver long-term value for our investors going forward.”