GDS Holdings Limited ( GDS ) are trading higher Friday amid continued interest sparked by reports that the company is evaluating an initial public offering (IPO) for its data center assets in China.

What To Know: Sources familiar with the matter, who requested anonymity due to the private nature of the discussions, indicated that GDS is collaborating with advisers to gauge investor interest in the potential IPO, according to Bloomberg.

The proposed real estate investment trust (REIT) could generate proceeds of approximately 1 billion yuan, equivalent to about $140 million. However, the deliberations are still in preliminary stages and the possibility remains that no final transaction will occur. The company has not provided any official comment on the matter.

Over the past year, the Chinese government has relaxed rules regarding the eligibility of assets for inclusion in REITs, a move that analysts believe could establish China as a significant player in the global commercial property trust market. Since these regulatory changes, 13 REIT IPOs have been priced in China. Furthermore, the China Securities Regulatory Commission is reportedly working on incorporating REITs into the Hong Kong Stock Connect program, a move designed to increase exposure to offshore investors.

The company also announced a $1.2 billion Series B funding round for its international data centers. Notable participants in this round included Coatue Management, SoftBank Vision Fund and Ken Griffin, CEO of Citadel. This funding underscores GDS's broader strategy to position itself as a major player in the global data center space while leveraging favorable developments in the REIT market domestically.

GDS Price Action: GDS Holdings ( GDS ) shares were up 7.38% at $22.18 at publication Friday, according to Benzinga Pro.

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