Data and transaction services company Connxion (ASX:CXN) has signed the final agreement to establish a joint venture in China with Global Data Solutions (GDS).
Connxion said it had executed a formal MoU with GDS, a China-based data centre operator, to set up the JV. It is now on track to begin operations in Q4.
Bill Brooks, Connxion's CEO, said the company planned to invest at least 10 million yuan ($1.5 million) in Connxion China over the next two to three years.
“Partnering with GDS will allow Connxion to enter the sizeable Chinese market with minimal capital expenditure, whilst providing access to numerous leading businesses within [our] target industries,” he said.
GDS was chosen because it already has a substantial data centre presence – it owns and operates nine Tier 4 data centres across China.
The venture will be 90% owned by Connxion, with GDS holding the remainder. The terms of the agreement grant Connxion preference in using GDS data centres, but do not obligate their use, Brooks said.
Both Connxion and GDS are also negotiating with a number of potential channel partners for the businesses, in Connxion's targeted industries, he said.
He added that he expects the JV to contribute to revenue and profits this financial year, and that Connxion will pursue a capital raising to meet its project commitment of between $1.5 million and $2.5 million.
Connxion on Wednesday formally changed its name from Connxion Ventures Limited to Connxion Limited.