Asian Consortium in Talks to Buy Stake in Data Centre Operator Global Switch

4 September 2016 – Reuters

Global Switch, a data center operator owned by London’s billionaire Reuben Brothers, said Sunday it’s in talks to sell a stake to Asian investors. A newspaper’s report that the discussions are with a Chinese consortium sparked criticism from a former U.K. intelligence official.

The U.K.-based company operates data centers in London, Hong Kong and Sydney, which house web servers for the financial and telecommunications industries as well as governments. It has the largest “footprint” in Europe and the Asia-Pacific region, according to its corporate brochure.

Parent company Aldersgate Investments Ltd. is in discussions with a “consortium of high quality private sector Asian investors,” Global Switch said Sunday in an e-mailed statement. Aldersgate and the consortium would exercise joint control of Global Switch. No transaction has been concluded, the statement said.

China Ties

The Sunday Times reported that British brothers David and Simon Reuben, who own Aldersgate Investment Management, are talking with a consortium led by Daily Tech, which provides space for Internet servers for companies including Alibaba Group Holding Ltd. and EBay Inc. The newspaper said Daily Tech has the backing of a dozen investors including Avic Trust, a subsidiary of the state-owned Aviation Industry Corp. of China.

Malcolm Rifkind, former head of the U.K. Parliament’s intelligence and security committee and foreign secretary in 1995-97, urged the government to examine the security risks of selling a stake to China. “The government needs to be satisfied there are no risks involved,” Rifkind told the Sunday Times. He added that he expects any decision on intervention by the government to be based on advice from security services including intelligence agency GCHQ.

Rifkind’s comments add to security concerns in the U.K. over Chinese investment, highlighted by Prime Minister Theresa May’s delay in approving the contract for the Hinkley Point nuclear-power project in which China would be a one-third owner. May acted in July.

The company brushed aside security concerns, saying it would continue to comply with the guidance given in the U.K. government’s national security strategy. “There are no security issues relating to this financial transaction,” the company said in the statement, referring to the Times report.

“Global Switch has no access to customer data whatsoever and only provides space, power, cooling and physical security,” according to the statement. “Neither Global Switch nor its shareholders can access the dedicated areas that house the customers’ servers.”