GDS Holdings (GDS) said Tuesday that its international affiliate, DigitalLand, has secured $1 billion from institutional US investors, primarily led by Coatue Management and The Baupost Group, through a series B convertible preferred share issuance.

The data center operator said the raised funds are expected to be able to fund the expansion of GDS's data center capacity to up to 1 gigawatt.

The company said it chose not to exercise pre-emption rights for this investment, which reduces its stake to about 37.6% in DigitalLand, and discontinues its majority control and accounting consolidation of the affiliate.

The value of GDS's stake is roughly $1.3 billion, or $6.75 per GDS American Depositary Share, based on the series B subscription price, the company added.

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