Chinese tycoon plans to offload sensitive UK data sites


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 major information storage facilities across Europe and looks after data for corporations and governments. 

Chinese steel conglomerate Jiangsu Shagang Group – chaired by tycoon Shen Wenrong, who built up the business – has quietly increased its shareholding to more than 50 per cent in the past two years, giving it a controlling stake. 

Kingpin: Shen Wenrong is selling Global Switch which has two major data storage centres in London’s Docklands (pictured)

Wenrong, one of China’s first ‘red capitalists’, has become a prominent figure in the Chinese Communist Party which runs the country amid tight surveillance of its population. 

Shagang is now seeking to sell its entire 51 per cent holding in Global Switch alongside the remaining Chinese investors in the business, according to City sources. Management meetings with interested investors started last week, they said. 

The Mail on Sunday has learnt that Australian Super, one of the country’s largest pension funds, is eyeing Global Switch. 

Others said to be interested include Stockholm-based EQT, one of the world’s largest private equity companies, and Florida-based DigitalBridge Group. 

The sale revelations have raised fresh fears about the security of Britain’s most sensitive infrastructure at a time when the Government is reviewing Chinese investment in strategic assets. 

The National Security and Investment Act, which came into force earlier this year, gives Ministers enhanced powers to intervene on takeovers across a number of sectors, including data centres. 

Global Switch is Europe’s largest data centre operator and has two major facilities in London’s Docklands, with a third in development. 

These store vast amounts of highly sensitive data for banks, governments and telecom companies such as BT. 

Tory grandee and MP David Davis told The Mail on Sunday: ‘In the modern age, the Government should be incredibly sensitive about any foreign ownership of major databases, particularly when they cover sensitive, personal and financial data. 

‘This is doubly so when the share holders are Chinese and even more so when they are leading Communist Party members. 

‘Simple common sense dictates that the Government should not allow British citizens or British companies to be exposed to the attitudes of surveillance that are commonplace in China.’ 

In 2015, then-Chancellor George Osborne heralded 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 announced that Chinese telecoms giant Huawei would be banned from inclusion in Britain’s high-tech 5G mobile communications network. 

MI5 director-general Ken McCallum last week warned business leaders that Beijing is determined to steal their technology for competitive gain. 

Conservative MP Bob Seely, a member of the Commons Foreign Affairs Select Committee, said: ‘We should be wary in principle of Chinese taking control of critical infrastructure, given the amount of IP [Intellectual Property] theft because of spying and espionage.’ 

Global Switch insists it has no access to any customer data and says it merely provides secure sites where firms and governments can locate their own computer servers. 

The move to sell the group comes after the Australian Government agreed to move most of its data and applications out of Global Switch’s data centre in Sydney by July 2022, and into facilities owned by other providers amid national security concerns. 

The Chinese owners are partly selling over fears of losing more tenants in Europe and elsewhere as governments become increasingly nervous about their critical infrastructure in the hands of foreign owners, sources said. ‘They fear more is to come as European countries don’t want Chinese conglomerates owning government data centres,’ one source said. Another source insisted that the sale process is in response to ‘strong inbound international investor interest’ and high valuations fetched by data centre assets. 

Global Switch scrapped plans for an initial public offering in Hong Kong in 2019 after business performance was hurt by the loss of key customers, one source added. 

The company increased profit before interest, tax and exceptional costs by 6 per cent last year to £251.4million, and revenues by 2 per cent to £419million. 

Last month, it 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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