GDS Holdings and Singapore’s sovereign wealth fund GIC have joined forces to invest in data centres outside of first-tier Chinese cities.

Chinese data centre developer GDS said it has agreed with the US$100bn (€89.1bn) sovereign wealth fund to develop and operate the build-to-suit (BTS) data centres in China, of which GIC will own a majority stake.

GDS and GIC will focus initially on a BTS data centre program for an internet and cloud service provider, which is a strategic customer of GDS.

GDS said it will set up individual project companies to undertake the development of each data centre and own 100% during the construction phase.

Upon completion of each data centre, GDS will sell a 90% equity interest in the project company to GIC. GDS will continue to hold the remaining 10% equity interest of the project company and provide management and operating services to the joint venture.

GDS said the joint ventures first project in Jiangsu province is nearly complete.

William Huang, chairman and CEO of GDS, said: “We are delighted to establish this joint venture with GIC Real Estate, the partner of choice in the data centre industry, anchored by a major commitment from one of our top strategic customers for multiple new build-to-suit data centres at their campuses across China.

“While our core business remains strongly focused on providing outsourced data centre solutions in Tier 1 markets, where the entry barrier is high and where we believe our core value lies, the partnership with GIC enables us to supplement our primary offerings and cost-effectively fulfil the broader requirements of strategic customers outside of Tier 1 markets, while maintaining our equity returns.”