Hillhouse Seeks $600M Loan to Double Down on DayOne Data Centers
Miles Bennett
Hillhouse Investment is in talks with banks for a ~$600 million three-year loan to fund its stake in data-center operator DayOne and partly repay earlier debt. This means Hillhouse's bet on DayOne now spans both equity and leverage — a wager that AI-driven data-center valuations will hold through an IPO window.
What are the loan terms?
The loan is sized at ~$600 million with a three-year tenor, priced at roughly SOFR + 500 basis points — that is, five percentage points above the benchmark U.S. floating rate, a relatively steep cost of borrowing.
The deal may include a greenshoe option — a clause letting the borrower draw additional funds beyond the original amount.
Negotiations are still early-stage; final terms may shift. This means → the numbers are not locked, but Hillhouse's willingness to pay a premium rate for this position is already clear.
How much has Hillhouse put into DayOne?
DayOne closed a $4.5 billion Series C earlier this month, co-led by Hillhouse and Coatue Management.
After the C round, Hillhouse's stake (on a non-diluted basis) rose from ~18% post-Series-A in 2024 to ~19%.
In plain terms = the equity stake inched up by one percentage point, but layered with a $600 million loan, Hillhouse is running an equity-plus-debt double lever on a single asset — a commitment well beyond ordinary follow-on logic.
Why does DayOne need so much capital?
DayOne (formerly GDS International) operates data centers across Singapore, Malaysia, Indonesia, Thailand, Hong Kong, Tokyo, and Finland, and is expanding aggressively amid the AI boom.
The company is separately negotiating to expand its Malaysia credit facility to as much as $7 billion.
This reflects a "burn capital to build scale" phase in AI-driven data-center construction — it is not just Hillhouse adding leverage; DayOne's own funding appetite is ballooning in parallel.
What do the IPO outlook and investor lineup signal?
DayOne is exploring a U.S. IPO at a target valuation of up to $20 billion.
Earlier investors include SoftBank Vision Fund, Citadel Securities founder Ken Griffin, and Baupost Group.
This means → Hillhouse is not betting alone — SoftBank, Griffin, and other heavyweight capital are at the same table, underwriting DayOne's valuation narrative. But the real proof point remains: whether the IPO materializes and whether all this capital converts into measurable operating scale.
Content is for reference only, not financial advice.