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United States securities and exchange commission logo
May 8, 2020
Jing Ju
Chief Executive Officer
Chindata Group Holdings Ltd.
No. 47 Laiguangying East Road
Chaoyang District, Beijing, 100012
The People's Republic of China
Re: Chindata Group
Holdings Ltd.
Draft Registration
Statement on Form F-1
Submitted April 13,
2020
CIK No. 0001807192
Dear Mr. Ju:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form F-1
Cover Page
1. Please disclose the
percentage of voting power that will be held by the Bain Capital
Entities upon the
completion of the offering.
Prospectus Summary
Our Business, page 1
2. You disclose that you
are "the only hyperscale data center solution provider with presence
in China, India and
Southeast Asia." Please disclose the basis for this statement.
According to your
disclosure on pages 125 and 126, you operate six hyperscale data
Jing Ju
Chindata Group Holdings Ltd.
May 8, 2020
Page 2
centers in China, one hyperscale data center in Malasia, and no
hyperscale data centers in
India.
3. Please disclose the relevance of comparing the delivery time of your
data centers in China,
the average annual PUE for your data centers in service, and
construction cost per MW of
data center capacity in service to global industry averages rather
than the industry
averages in your particular geographic markets.
4. Please disclose here the amount or percentage of revenue generated
from each of
ByteDance and Microsoft in fiscal 2019 as well as from your related
party, Wangsu.
Corporate History and Structure, page 4
5. Please tell us whether there any related party interests between your
nominee
shareholders, Messrs Chen Qian and Fei Xu, and either the company, its
officers, directors
or significant shareholders. If so, please revise accordingly.
6. Please revise your organization chart to reflect the corporate
structure following the
completion of the offering and include the anticipated percentage
ownership of public
shareholders and affiliates.
Conventions Which Apply to This Prospectus, page 8
7. Please provide us with copies of the reports you commissioned from
Frost & Sullivan
and Uptime Institute that you reference throughout the prospectus,
cross-referencing each
statement in your document with the corresponding supporting material.
Risk Factors
Risks Relating to Our Business and Industry
We face risks associated with having a long selling and implementation
cycle..., page 20
8. Please disclose the typical length of your sales cycle.
Risks Relating to Doing Business in China, page 42
9. We note your risk factor discussion of limitations on the ability of the
PCAOB to conduct
investigations of your auditor. Please include another risk factor that
highlights recent
FirstName LastNameJing Ju
developments (e.g. Article 177 of PRC Securities Law effective March
2020) possibly
Comapany NameChindataoverseas regulatorLtd. conducting investigations or from
collecting
further limiting an Group Holdings from
May 8,evidence within the PRC.
2020 Page 2
FirstName LastName
Jing Ju
FirstName LastNameJing Ju
Chindata Group Holdings Ltd.
Comapany NameChindata Group Holdings Ltd.
May 8, 2020
Page 3
May 8, 2020 Page 3
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We are an emerging growth company and may take advantage of certain reduced
reporting
requirements, page 64
10. Please revise here to also state that as a result of your election to
take advantage of the
extended transition provisions for complying with new or revised
accounting standards,
your financial statements may not be comparable to companies that
comply with public
company effective dates.
Use of Proceeds, page 68
11. We note that you intend to use the proceeds from this offering to
repay of a portion of
your outstanding indebtedness. Please provide the disclosure required
by Item 3.C.4 of
Form 20-F. Also, confirm that you intend to reflect the repayment of
debt in your
Capitalization table and if so, revise to include a placeholder until
such amounts are
known.
12. Please provide an estimate of the dollar amount of proceeds that will
be immediately
available for investment in operations within the PRC for your
intended purposes based
upon applicable PRC government restrictions.
Selected Financial Data
Non-GAAP Financial Measures, page 85
13. Please revise to clarify what is included in the "one-off and other
non-operating expenses"
adjustment and separately quantify any material items included in such
amount. Also, tell
us how you determined that these adjustments are appropriate under
Item 10(e)(1)(ii)(B)
of Regulation S-K. In this regard, to the extent such charges are
reasonably likely to recur
within two years or a similar charge occurred in the prior two years,
please revise this line
item to no longer refer to "one-off" expenses.
Management's Discussion and Analysis of Financial Condition
Overview, page 88
14. Please disclose the comparable capacity measures as of December 31,
2018 to add context
to the amounts as of December 31, 2019. Further, revise to discuss any
other key
performance indicators that management uses in managing the business,
such as the
number of customers. Refer to Section III.B of SEC Release 33-8350.
Key Factors Affecting Our Results of Operations, page 89
15. Please include a discussion regarding the amount of revenue generated
from ByteDance
and Wangsu, the nature of the contracts and the significance of those
customers to your
business. Refer to Section III.B of SEC Release 33-8350.
Jing Ju
FirstName LastNameJing Ju
Chindata Group Holdings Ltd.
Comapany NameChindata Group Holdings Ltd.
May 8, 2020
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Liquidity and Capital Resources, page 101
16. Please disclose the amount of cash and cash equivalents disaggregated
by currency
denomination as of the most recent balance sheet date.
17. Considering the significant amount of debt outstanding at December 31,
2019, please
disclose the material terms of any financial covenants and clarify
whether any existing
covenants may limit your ability to undertake additional financing in
the future. Refer to
Section IV.C of SEC Release 33-8350.
Business
Our Data Centers, page 125
18. Please revise the graphic of your data center footprint on page 126 to
identify the type of
data center (e.g., hyperscale, wholesale) at each location.
Our Clients and Client Ecosystem Development, page 131
19. We note that you derive 68.2% and 11.1% of your revenues from your
agreements with
ByteDance and Wangsu, respectively. Please disclose the material terms
of your
agreements with these entities. File these agreements as exhibits to
your registration
statement, or tell us why you do not believe you are required to file
them. Refer to Items
601(b)(10)(ii)(A) and (B) of Regulation S-K.
Intellectual Property, page 132
20. Please clarify in which jurisdictions you possess the intellectual
property rights identified
in this section.
Description of American Depositary Shares
Jurisdiction and Arbitration, page 181
21. You state that the deposit agreement includes an exclusive
jurisdiction provision as well
as the right of the depositary to refer any claims brought for
arbitration. Please further
disclose here and in your risk factors how the exclusive jurisdiction
provision and the
arbitration provision impacts ADS holders, whether these provisions
apply to actions
arising under the Securities Act or Exchange Act and address any
question as to the
enforceability of the arbitration provision. Moreover, please disclose
in both your
registration statement and the depositary agreement that despite
agreeing to the arbitration
provision, investors will not be deemed to have waived the company's
or the depositary's
compliance with the federal securities laws and the rules and
regulations thereunder.
Underwriting, page 192
22. Please disclose the exceptions to the lock-up agreements.
Jing Ju
FirstName LastNameJing Ju
Chindata Group Holdings Ltd.
Comapany NameChindata Group Holdings Ltd.
May 8, 2020
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Notes to Consolidated Financial Statements
Note 2 Summary of Significant Accounting Policies
Revenue Recognition, page F-23
23. Please tell us the nature, terms and length of the contracts under
which efforts or inputs
are expended evenly throughout the performance period as compared to
those contracts
where efforts or inputs are not expended evenly. Tell us whether any
of these
arrangements include contractual minimums and if so, how those impact
your revenue
recognition policy. Also, revise your disclosures as necessary.
24. You state that the timing of revenue recognition may differ from the
timing of invoicing to
customers. Please expand this disclosure to explain the typical
billing and payment terms
under your contracts and how the differences in timing of revenue
recognition and
invoicing your customers impacts any contract assets or contract
liabilities recorded.
Further, to the extent material, please disclose the amounts of
contract assets and liabilities
and the amount of revenue recognized in the reporting period that was
included in the
contract liability balance at the beginning of the period. Refer to
ASC 606-10-50-8 and
50-9.
25. Please disclose the aggregate amount of transaction price allocated to
the performance
obligations that are unsatisfied. Refer to ASC 606-10-50-13. If you
are applying the
optional exemptions in ASC 606-10-50-14 and 14A, revise to disclose
the information
required by ASC 606-50-10-15.
Unaudited Pro Forma Shareholders' Equity, page F-28
26. Please provide us with a breakdown of the one-time share-based
compensation expense
and one-time consulting agreements' termination expense that will be
recognized upon
effectiveness of this offering and describe further the terms of the
consulting agreements
that you intend to terminate. Tell us how you determined that
inclusion of these pro forma
adjustments on the face of the historical financial statements is
appropriate. Also, tell us
your consideration to include similar adjustments in your pro forma
capitalization
information.
Note 11. Taxation, page F-35
27. You state here that Chindata (Hebie) qualified as a High New
Technology Enterprise
(HNTE) and therefore, is entitled to a preferential tax rate from 2018
to 2020. However,
on page 95 your indicate that both Chindata (Hebie) and Chindata
(Beijing) qualify as
HNTEs and the preferential tax rates are in effect through November
2021. Please
explain these apparent inconsistencies and revise as necessary.
Jing Ju
FirstName LastNameJing Ju
Chindata Group Holdings Ltd.
Comapany NameChindata Group Holdings Ltd.
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Note 12. Share-based Payments, page F-38
28. Please revise to quantify the number of ISUs that will be subject to
accelerated vesting
upon completion of the IPO. Also, tell us how you determined that all
share-based
compensation expense should be reflected in general and administrative
expense. We refer
you to SAB Topic 14.F.
Note 16. Business Combination, page F-41
29. Please revise to include the comparative pro forma revenue and
earnings information for
the year ended December 31, 2018 or further explain, and disclose, why
it is
impracticable to provide this information. In this regard, we note the
historical ChinData
financial statements are already included in the filing and the only
adjustments you
describe for the fiscal 2019 pro forma information are amortization of
acquired intangible
assets and income tax effects. Refer to ASC 805-10-50-2h and
250-10-45-9.
Note 20. Subsequent Events, page F-44
30. Please tell us how you determined the fair value of the 17.6 million
Class B options
granted in January 2020. In this regard, provide the methodology and
specific
assumptions used, including the fair value of the common stock
underlying such
options. Also, revise to clarify the service period over which 60% of
the awards are
scheduled to vest and describe the performance targets that must be
achieved for the
remaining 40% to vest. Lastly, disclose what portion of the awards are
subject to
accelerated vesting upon completion of an IPO and the amount of
compensation expense
that will be recorded upon effectiveness of this offering.
31. Please provide us with a breakdown of any additional awards granted
since January 2020
including the fair value of the underlying stock used to value such
awards. To the extent
there was any significant fluctuations in the fair values, please
describe for us the factors
that contributed to such fluctuations, including any intervening
events within the company
or changes in your valuation assumptions or methodology.
General
32. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
Jing Ju
FirstName LastNameJing Ju
Chindata Group Holdings Ltd.
Comapany NameChindata Group Holdings Ltd.
May 8, 2020
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You may contact Melissa Kindelan, Staff Accountant, at (202) 551-3564 or
Kathleen Collins, Accounting Branch Chief, at (202) 551-3499 if you have
questions regarding
comments on the financial statements and related matters. Please contact Jeff
Kauten, Staff
Attorney, at (202) 551-3447 or Kathleen Krebs, Special Counsel, at (202)
551-3350 with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of Technology
cc: David Zhang, Esq.