NEXTDC expands Sydney data centre

By:
Bill Boyle
Published on:

NEXTDC has announced plans for a second AU$150m Sydney data centre

NEXTDC has signed a deal with an existing customer for a new 1.5MW contract and plans for a second Sydney data centre (S2) to be funded via a capital raising of approximately AU$150 million.

The new contract is with the main customer the company opened its initial contract on 11 December 2014. NEXTDC has announced its decision to develop a second data centre in Sydney. The company is currently undertaking due diligence on new sites for the facility, with an expected capacity of approximately 30MW. It expects practical completion of S2 in 1H FY18.

The company intends to hold the underlying property at S2 once it is built. This strategy increases NEXTDC’s control over its assets.

Chief Executive Officer, Mr Craig Scroggie said: “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 continues to evolve and refine the design of our facilities; S1 is already one of Australia’s most awarded data centres, 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 will use the money from the AU$150m capital raising to fund the purchase of land and the development of S2, as well as general corporate purposes.

NEXTDC intends to invest between AU$140m to AU$150m in the development of S2 across FY17 and FY18, of which AU$60m to AU$100 million is expected to be spent in FY17.

NEXTDC expects the S2 facility to generate returns in excess of the cost of capital. "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," said NextDC CEO Craig Scroggie.

"NextDC continues to evolve and refine the design of our facilities; S1 is already one of Australia's most awarded data centres, 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.

"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.