CITIC’s Xinjin to launch $3bn data centre-focused fund

The asset manager expects demand for data centres in China to be strong thanks to 5G and IoT technologies.

Asset manager Xinjin Investment Holding, an affiliate of China’s CITIC Group, has partnered with Japan’s trading house Itochu and the telecommunications operator KDDI to launch a $3 billion infrastructure fund focused on the construction of new data centres in China’s largest cities.

“Thanks to the development of the 5G and IoT technologies, we expect the demand for data centres to grow really quickly, especially in China’s top-tier cities. We are already seeing an important pipeline of deals,” Jiang Xuetao, director and managing partner at Xinjin Investment told Infrastructure Investor.

According to Jiang, the vehicle, that has not been launched yet, will seek to raise capital from Japanese investors. “We expect it to be an interesting opportunity for Japanese institutional investors, due to the low-rate environment in the country,” Jiang said.

Xinjin expects to announce an anchor investor for the vehicle in the next few weeks, Jiang said, declining to provide more details.

The manager said that Itochu, which together with Thailand’s Charoen Pokphand Group paid $10 billion for a 20 percent stake in CITIC in 2016, will “leverage their network in Japan to help with the fundraising.” KDDI “will help with its knowledge in the technology of data centres,” Jiang explained.

Itochu declined to comment for this story.

The asset manager has also partnered with CITIC Construction for the building of greenfield projects in China. Jiang said the firm is expecting “very attractive returns,” but declined to provide further details.

The fund will invest mainly in greenfield mid- and large-sized projects, “with a preference in and around first-tier cities,” Jiang said.

The firm is aiming to reach 10-year lease agreements with tech companies in China. “We are having preliminary talks with several Chinese tech companies, including listed companies, to lease our data centres,” Jiang said.

In 2018, China had 802 million internet users, a vast majority of whom accessed the internet via their smartphones, Chinese news agency Xinhua reported.

Xinjin Investment was founded in 2018 as a joint venture between CITIC Group and other minority stakeholders.