A controversial Chinese tycoon is trying to sell a company that stores sensitive data in London – attracting the attention of major global infrastructure investors.
Global Switch, based in Westminster with a price tag of £8.3billion, also has significant information storage facilities across Europe and handles corporate and government data.
Chinese steel conglomerate Jiangsu Shagang Group – chaired by tycoon Shen Wenrong, who built the company – has quietly increased its stake to more than 50% over the past two years, giving it a controlling stake.
Kingpin: Shen Wenrong is selling Global Switch which has two main data storage centers in London’s Docklands (pictured)
Wenrong, one of China’s first “red capitalists”, has become a prominent figure in the Chinese Communist Party which rules the country under tight surveillance of its people.
Shagang is now seeking to sell his entire 51% stake in Global Switch alongside the other Chinese investors in the company, City sources say. Management meetings with interested investors began last week, they said.
The Mail on Sunday has learned that Australian Super, one of the country’s largest pension funds, is considering Global Switch.
Others interested include Stockholm-based EQT, one of the world’s largest private equity firms, and Florida-based DigitalBridge Group.
The revelations about the sale have sparked fresh fears over the security of Britain’s most sensitive infrastructure at a time when the government is scrutinizing Chinese investments in strategic assets.
The National Security and Investment Act, which came into force earlier this year, gives ministers increased powers to intervene in takeovers in a number of sectors, including data centres.
Global Switch is Europe’s largest data center operator and has two major facilities in London’s Docklands, with a third in development.
These store large amounts of highly sensitive data for banks, governments and telecommunications companies such as BT.
On Sunday, top Tory and MP David Davis told the Mail: ‘In the modern age, the government should be incredibly sensitive to any foreign ownership of major databases, especially when they cover sensitive, personal and financial data .
“This is all the more true when the shareholders are Chinese and even more so when it comes to Communist Party leaders.
“Plain common sense dictates that the government should not allow UK citizens or UK businesses to be exposed to the surveillance attitudes that are commonplace in China.”
In 2015, then-Chancellor George Osborne announced a “golden decade” of Sino-British relations during a visit to Beijing.
But by 2020, under pressure from US President Donald Trump, Prime Minister Boris Johnson has announced that Chinese telecommunications giant Huawei will be banned from inclusion in Britain’s high-tech 5G mobile communications network.
MI5 Director General Ken McCallum warned business leaders last week that Beijing was determined to steal their technology for competitive gain.
Tory MP Bob Seely, a member of the House of Commons Foreign Affairs Select Committee, said: ‘We should be wary in principle of Chinese takeover of critical infrastructure, given the amount of IP [Intellectual Property] theft because of espionage and espionage.
Global Switch insists it has no access to any customer data and says it merely provides secure sites where businesses and governments can locate their own computer servers.
The decision to sell the group comes after the Australian government agreed to move most of its data and applications out of Global Switch’s data center in Sydney by July 2022 and into facilities owned by other providers in a national security context.
Chinese landlords are selling partly out of fear of losing more tenants in Europe and elsewhere, as governments grow increasingly nervous about their critical infrastructure in the hands of foreign landlords, sources said. “They fear more is coming because European countries don’t want Chinese conglomerates to own government data centers,” a source said. Another source insisted that the sale process responds to “strong interest from incoming international investors” and high valuations obtained by data center assets.
Global Switch scrapped plans for a Hong Kong IPO in 2019 after business performance was hit by the loss of key customers, a source added.
The company increased its profit before interest, tax and exceptional charges by 6% last year to £251.4 million, and revenue by 2% to £419 million.
Last month, he appointed JPMorgan, Morgan Stanley, UBS and CITIC Securities as joint financial advisers to explore strategic options.
Last night the company declined to comment on the ongoing sale process.
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