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United States securities and exchange commission logo
August 8, 2022
Dongning Wang
Chief Financial 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
Form 20-F for the
Fiscal Year Ended December 31, 2021
Filed April 29,
2022
File No. 001-39556
Dear Mr. Wang:
We have limited our review of your filing to the financial
statements and related
disclosures 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 these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 20-F for the fiscal year ended December 31, 2021
Introduction, page 1
1. Please revise your
definition of China or PRC to remove the exclusion of Hong Kong and
Macau from this
definition.
Item 3. Key Information
Our Holding Company Structure and Contractual Arrangements with Our VIEs
and Their
Respective Shareholders, page 3
2. Please revise to
refrain from using terms such as we or our when describing
activities
or functions of a VIE.
In this regard, we note numerous references to "our VIEs"
throughout the filing.
Dongning Wang
FirstName LastNameDongning
Chindata Group Holdings Ltd Wang
Comapany
August NameChindata Group Holdings Ltd
8, 2022
August
Page 2 8, 2022 Page 2
FirstName LastName
3. Revise your diagram on page 4 to reflect the "Contractual
Arrangements" between the
WFOEs and VIEs with dashes but without arrows.
Risks Relating to Our VIEs and China Operations, page 5
4. Please revise your disclosure to address how recent statements and
regulatory actions by
China s government, such as those related to data security or
anti-monopoly concerns,
have or may impact the company s ability to conduct its business,
accept foreign
investments, or list on a U.S. or other foreign exchange.
Cash and Asset Flows Through Our Organization, page 6
5. You disclose the amount of service fees that the VIEs paid to the
WFOEs and their
subsidiaries, net of the cash paid by the WFOEs and their subsidiaries
to the VIEs. Please
revise to separately disclose amounts paid by the VIEs to the WFOEs
and their
subsidiaries and amounts paid by the WFOEs and their subsidiaries to
the VIEs. Also
provide cross-references to the condensed consolidating schedule and
the consolidated
financial statements.
The Holding Foreign Companies Accountable Act, page 7
6. Please revise here to also discuss the Accelerating Holding Foreign
Companies
Accountable Act (Accelerating HFCAA) rather than just including a
cross reference to
risk factors elsewhere in the filing. Discuss the specific time frames
for complying with
the Accelerating HFCAA and discuss the impact to your company if you
are unable to
timely comply. In this regard, your disclosures both here and on page
47 should be clear
as to whether the related risks and uncertainties could cause the
value of your ADSs to
become worthless.
Approvals required from the PRC Authorities for Offering Securities to Foreign
Investors, page
8
7. We note your disclosure that in connection with previous issuance of
securities to foreign
investors, under current PRC laws, regulations and regulatory rules,
your PRC
subsidiaries, and the VIEs, (i) have not received any requirement from
competent PRC
governmental authorities to obtain permissions from the China
Securities Regulatory
Commission (CSRC) (ii) have not received any requirement from
competent PRC
government authorities to go through cybersecurity review by the
Cyberspace
Administration of China (CAC) and (iii) have not received nor were
denied such requisite
permissions by any PRC authority. Please also disclose whether you
relied on the opinion
of counsel in making this determination. If you did not rely on
counsel, explain why you
did not consult counsel and why you believe you do not need such
permissions or
approvals. Please also describe the consequences to you and your
investors if you, your
subsidiaries, or the VIEs: (i) do not receive or maintain such
permissions or approvals, (ii)
inadvertently conclude that such permissions or approvals are not
required, or (iii)
Dongning Wang
FirstName LastNameDongning
Chindata Group Holdings Ltd Wang
Comapany
August NameChindata Group Holdings Ltd
8, 2022
August
Page 3 8, 2022 Page 3
FirstName LastName
applicable laws, regulations, or interpretations change and you are
required to obtain such
permissions or approvals in the future.
Financial Information Related to Our VIEs, page 8
8. Please address the following as it relates to your Selected Condensed
Consolidated
financial statements:
Revise to include a separate column for the WFOEs that are the
primary beneficiaries
of the VIEs.
Revise the reference to primary beneficiary here and elsewhere
throughout the filing
to clarify that you are "primary beneficiary" of the VIEs for
accounting purposes
only.
Revise the balance sheet line item reference to "Investment in
subsidiaries and VIEs,"
as this implies the VIE arrangements are similar to an equity
method investment.
Revise to add shareholders equity line item(s) to the balance
sheets.
Revise to present the service fee expense paid by the VIEs to the
primary beneficiary
separately from the other costs and expenses of the VIEs.
Revise to remove VIEs from the line item Share of income
(loss) of subsidiaries
and VIEs and adjust the amounts accordingly as this also
implies the VIE
arrangements are similar to an equity method investment.
Revise to refer to these schedules as condensed consolidating
statements.
Risks Relating to Our Corporate Structure
We face challenges from the evolving regulatory environment regarding
cybersecurity,
information security, privacy and data protection..., page 32
9. Please revise to more clearly disclose to what extent you believe that
you are compliant
with the regulations or policies that have been issued by the CAC to
date.
Item 5. Operating and Financial Review and Prospects
Results of Operations
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020, page 99
10. You disclose the increase in colocation services revenue was due to
the growth of your
business. Please revise to better describe the underlying reasons for
this material change
in quantitative or qualitative terms. For example, describe the extent
to which changes are
attributable to the change in pricing or changes to volume related to
the number of data
centers in service and/or the related capacity of such centers. Refer
to Item 5.A of Form
20-F.
11. There are various instances throughout your results of operations
discussion where you
cite two or more factors as contributing to the variance in a certain
line item. For
example, you state that the increase in cost of revenue from
colocation services in China
was primarily due to the increase in utility costs and depreciation
expense. Also, you
disclose that the decrease in general and administrative expense was
primarily due to the
Dongning Wang
FirstName LastNameDongning
Chindata Group Holdings Ltd Wang
Comapany
August NameChindata Group Holdings Ltd
8, 2022
August
Page 4 8, 2022 Page 4
FirstName LastName
decrease in share-based compensation expense, management consulting
services fees
related to IPO and employee benefit expense. Please revise throughout
to quantify each
material factor, including any offsetting factor, that contributed to
such change. In
addition, you should remove vague terms such as "primarily" in favor
of specific
quantification.
Non-GAAP Measures, page 101
12. Please revise to disclose net loss margin, the comparable GAAP measure
to adjusted
EBTIDA margin and adjusted net income margin, with greater prominence
for each
period presented. Refer to Item 10(e)(1)(i)(A) of Regulation S-K and
Question 102.10 of
the Non-GAAP C&DIs.
13. Your non-GAAP measure, Adjusted Net Income, excludes depreciation and
amortization
of property and equipment and intangible assets resulting from
business combinations,
which you indicate is an item that you do not consider indicative of
the performance of
your business. Please revise to clarify that while you exclude such
expenses in this
measure, the revenue from the acquired companies is reflected in this
measure and the
acquired assets contribute to revenue generation.
Liquidity and Capital Resources
Cash Flows and Working Capital, page 104
14. Your discussion of cash flow from operating activities appears to be a
recitation of the
changes already disclosed in the consolidated statement of cash flows.
Please revise and
expand this discussion to include the primary drivers and other
material factors necessary
to understand the company s cash flows from operating activities. We
refer you to
Section IV of SEC Release 33-8350.
Critical Accounting Estimates, page 106
15. Please explain why you appear to include separate discussions of
Critical Accounting
Estimates and Critical Accounting Policies and Judgements or revise as
necessary. Also,
your current disclosures appear to repeat your accounting policy
disclosures in Note 2.
Please revise to explain why each critical accounting estimate is
subject to uncertainty
and, to the extent the information is material and reasonably
available, how much each
estimate and/or assumption has changed over a relevant period, and the
sensitivity of the
reported amounts to the material methods, assumptions and estimates
underlying its
calculation. Refer to Item 5.E. of Form 20-F.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
Dongning Wang
Chindata Group Holdings Ltd
August 8, 2022
Page 5
You may contact Melissa Kindelan, Senior Staff Accountant, at (202)
551-3564 or
Kathleen Collins, Accounting Branch Chief, at (202) 551-3499 with any
questions.
FirstName LastNameDongning Wang Sincerely,
Comapany NameChindata Group Holdings Ltd
Division of
Corporation Finance
August 8, 2022 Page 5 Office of Technology
FirstName LastName