​NextDC to raise AU$150m for new Sydney datacentre

Australian-listed NextDC is seeking AU$150 million to fund the construction of a new datacentre in Sydney after almost exhausting its existing space from the signing of a contract extension.
Written by Asha Barbaschow, Contributor

Datacentre-as-a-service provider NextDC has announced its intention to raise AU$150 million for the construction of a new datacentre in New South Wales.

The company told shareholders on Tuesday that it signed a new deal with an existing customer that requires 1.5 megawatts (MW) of capacity; and with its existing Sydney facility (S1) now sitting at 82 percent utilisation, NextDC needs more space.

NextDC expects to build a new datacentre in Sydney (S2) at a cost of AU$140 million to AU$150 million across FY17 and FY18, which will include ownership of the underlying property.

The company said it was currently undertaking due diligence on several potential sites for the new facility, with an expected target of approximately 30MW capacity ready by the first half of the 2018 financial year.

"S1 has proven to be highly successful for the company in a relatively short timeframe. We are confident that the demand in Sydney, together with our return expectations, warrants the next phase of investment," NextDC CEO Craig Scroggie said.

"NextDC continues to evolve and refine the design of our facilities; S1 is already one of Australia's most awarded datacentres, and with a planned 30MW at full fit out, S2 will have roughly double the capacity of S1, and be designed for its critical infrastructure to scale with customer uptake and adapt to their specific needs."

The company is hoping to raise approximately AU$50 million at AU$4.06 per share and a 1 for 9.1 accelerated non-renounceable pro rata entitlement offer to raise approximately AU$100 million at AU$3.74 per share.

NextDC secured space in Queensland's Fortitude Valley in May to build its AU$75 million Brisbane 2 (B2) datacentre, scheduled for completion in late 2017.

The AU$75 million includes the purchase of land, base building, and associated infrastructure to support an initial 1.5MW of IT load. At the time, NextDC said it has every intention for B2's total capacity to reach 6MW, building on a site close to a major electricity substation.

A day later, NextDC confirmed Tullamarine as the location for its AU$85 million Melbourne 2 (M2) datacentre, after executing a contract to acquire the space near one of Australia's busiest airports.

Similarly to B2, the AU$85 million investment includes the land, base building, and associated infrastructure to support the facility's initial 2MW of IT load, with the company expecting this to scale up to a target capacity of 25MW at full fit-out.

The company set out to raise AU$120 million in November to fund the construction of B2 and M2.

"Both B1 and M1 have proven to be highly successful facilities for the company in a relatively short period of time," Scroggie said previously. "We are confident that the ongoing demand in these geographies, together with our return expectations, warrants this next phase of investment in markets we know well."

NextDC said that the FY17 capital investment in B2 and M2 is expected to be between AU$120 million and AU$140 million.

The company said on Tuesday that the proceeds from the capital raising, together with current cash reserves, undrawn new AU$100 million secured debt facility, and ongoing operating cash flow, provide NextDC with adequate funds to complete the initial investment in S2, B2, and M2, as well as ongoing capital requirements.

For the 2015-16 financial year, NextDC reported its first full-year profit, posting a AU$1.8 million statutory profit on revenue of AU$92.8 million.

EBITDA was AU$27.7 million, a 247 percent increase from last year's AU$8 million.

At the time, Scroggie said the positive result was a significant achievement for what he called a young company with substantial capital investments.

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