Beijing Sinnet Technology is raising CNY 5.00 billion (USD 706.79 million) to fund the construction of internet data centres (IDCs) and to acquire 65.0 per cent of Zhida Yunchuang Sanhe Technology for CNY 1.13 billion.
The data processor is selling 462.94 million new shares, representing a 23.1 per cent post-issue stake, to as many as 35 investors.
Beijing is keen to promote big data, cloud computing and broadband, as well as the continued roll-out of 5G.
Its strategy comes amid a rapid development of the mobile Internet, high-definition video on demand/live broadcasting, artificial intelligence, Internet of Things and other fields.
This in turn has driven an increase in demand for infrastructure, data storage, computing power and network traffic.
According to data cited in the statement, China’s IDC market was worth CNY 150.00 billion in 2019 and is expected to exceed CNY 320.00 billion by 2022.
The country’s overall cloud computing market reached CNY 96.28 billion in 2018 and is anticipated to enter into a rapid stage of growth between 2019 and 2022, to amount to CNY 173.10 billion by 2022.
Sinnet provides customers with broadband access, IDCs and other internet integrated services and, in order to seize opportunities, continues to invest in its business and is keen to construct new facilities.
The equity dilution should also improve the group’s asset-liability ratio, which stood at 21.8 per cent, as at 31st December 2019.
Zephyr, the M&A database published by Bureau van Dijk, shows 3,788 capital increases have been announced in 2020 to date.
Chinese companies account for 721 of these cash calls, the largest of which is the USD 2.84 billion sale of new shares representing a 9.1 per cent stake in Contemporary Amerpex Technology.
Sinnet’s own capital increase is the country’s 15th biggest of 2020 to date.
© Zephus Ltd