GDS Holdings Limited (GDS) released an announcement indicating a planned private placement of US$300 million in Series B convertible preferred shares to Huatai Capital Investment Limited, a Chinese institutional investor. According to the announcement, the intended use of proceeds is to fund an expansion of data center capacity and for general corporate purposes.
The announcement notes that GDS is controlled through weighted voting rights, potentially allowing the weighted voting right beneficiary to exert significant influence on shareholder resolutions. The convertible preferred shares are set to accrue a 3.75% annual dividend for the first six years—payable in cash or in additional shares—after which the dividend rate increases to 6.75% on the sixth anniversary, with further incremental increases of 50 basis points per quarter for as long as any portion of these convertible preferred shares remains outstanding.
The conversion price has been set at a rate corresponding to approximately US$54.43 per GDS’s ADS. This represents a premium of about 17.5% over the last closing price on January 30, 2026, and approximately 30.9% over the 30-day volume weighted average price preceding the signing date. If fully converted at this price, the newly issued shares would represent around 2.62% of GDS’s total outstanding share capital at the time of the announcement. According to the filing, the convertible preferred shares will carry voting rights proportionate to the number of Class A ordinary shares to which they can be converted.
Conversion rights come into effect after March 31, 2027, subject to conditions outlined in the announcement, including share price milestones. Additionally, GDS may redeem the convertible preferred shares under specified circumstances, such as if certain price thresholds are met for a defined period. The shares will also have a liquidation preference over the company’s ordinary shareholders and a transfer restriction for the duration of the Series B convertible preferred shares.
The announcement states that the issuance will take place under GDS’s general mandate and does not require additional shareholder approval. The transaction is expected to close within five business days, pending customary corporate and regulatory approvals and subsequent listing acceptance by the Hong Kong Stock Exchange for conversion-related Class A ordinary shares. A safe harbor statement regarding forward-looking information and associated risks is included in the announcement. The directors believe the terms are fair and beneficial overall, particularly in light of the premium upon issuance and the ongoing strategic relationship with a leading Chinese financial institution.
Shareholders and potential investors are advised to exercise caution when dealing in the securities of GDS Holdings.