Chinese Data Center Company, 21Vianet, Announces $296M Investment from Kingsoft, Xiaomi and Temasek

21Vianet, one of the largest carrier-neutral data center service providers in China, has announced that Chinese software developer and distributor Kingsoft, mobile phone manufacturer Xiaomi, and Singaporean investment company Temasek, have entered into definitive share purchase agreements with 21Vianet.

Kingsoft has agreed to buy 21Vianet stocks worth $172 million. Xiaomi will invest $50 million in the company and Temasek has agreed to make a total investment of $74 million investment in 21Vianet. Kingsoft will now hold approximately 11.6% equity ownership in 21Vianet, representing approximately 19.9% of the voting power.

Xiaomi will hold approximately 3.4% equity ownership in 21Vianet, representing approximately 10.0% of the voting power. Temasek will hold approximately 13.1% equity ownership in 21Vianet, representing 5.8% of the voting power.

Kingsoft and Xiaomi will both have the right to nominate one director to 21Vianet’s board of directors.

A year ago, IBM joined forces with 21Vianet Group to introduce IBM’s cloud infrastructure service in China and accelerate managed private cloud adoption.

5,000 Cabinets

“By partnering with Kingsoft and Xiaomi, not only will we be able to expand the scale of our data center footprint, but we will also be able to develop the next-generation infrastructure platform, helping fuel the continued growth of mobile Internet traffic and cloud computing technology in China,” Mr. Shang Hsiao, Chief Financial Officer of 21Vianet stated. “Together, Kingsoft, Xiaomi and Temasek will be not only our strategic investors, but also our partners.”

cloud-servers-china21Vianet and Kingsoft will also sign a business cooperation memorandum. Under the terms of the memorandum, 21Vianet will build and operate new, state-of-art data centers in China and provide technical support to meet Kingsoft and its designated third party’s next-generation cloud infrastructure requirements. 21Vianet will lease to Kingsoft a combined minimum of 5,000 cabinets over the next three years.

“We welcome the new strategic investments by Kingsoft and Xiaomi and the additional investment by Temasek,” said Mr. Josh Chen, co-founder, chairman and chief executive officer of 21Vianet. “We are very excited to see that Kingsoft and Xiaomi, leading global technology companies, share our vision and strategy in developing open-source technologies, cloud ecosystems and the next generation internet infrastructure in China. As we remain fully committed to the carrier-neutral, customer- neutral and cloud-neutral value proposition, we are confident that their investments offer significant strategic value in strengthening our core operations and expanding new business opportunities.”

The transactions are subject to the satisfaction of customary closing conditions, with the closing expected to occur in January of 2015.

Furlow consulting