GDS Holdings Limited (GDS) shares dipped in premarket trading Tuesday after announcing a lucrative equity transaction with DayOne Data Centers Limited.

Here's the deal: GDS agreed to sell a chunk of its DayOne ordinary shares back to DayOne for $385 million. DayOne is a Singapore-based hyperscale data center platform where GDS holds a minority position.

The Numbers Tell a Pretty Good Story

The buyback price per share aligns with what DayOne just raised in its Series C convertible preferred financing round, which brought in more than $2 billion. That's a solid validation of the valuation.

For GDS, this transaction means recovering nearly 95% of what it originally put into DayOne—at roughly 6.5 times the initial investment. Not a bad payday by any measure.

And here's the kicker: after selling these shares, GDS still holds a DayOne stake worth more than $2.2 billion. That translates to approximately $11.18 per GDS American Depositary Share.

Where the Money Goes Next

GDS isn't planning to sit on this $385 million. The company intends to funnel those proceeds back into new projects within its core China operations, where it builds and operates high-performance data centers across the country's major technology hubs.

Management believes redeploying capital into its home market will generate strong returns as it continues expanding its data center platform.

For context, GDS reiterated its fiscal 2025 guidance on November 19: total revenues between 11.29 billion yuan and 11.59 billion yuan, adjusted EBITDA of 5.19 billion yuan to 5.39 billion yuan, and capital expenditure of 2.7 billion yuan.

Price Action: GDS Holdings shares traded down 3.18% to $42.60 in Tuesday's premarket session.