NEXTDC to build third Sydney datacentre

NEXTDC has entered a trading halt as the datacentre company looks to raise $672 million to finance construction of a third datacentre in Sydney.

In addition, the company said it will use some of the raised funds to improve flexibility on its balance sheet.

The company said it would break down the total capital raising into three segments. First, $350m will be used as an initial investment for a third Sydney datacentre. A further $307 million will go toward capacity requirements and development opportunities. The company said it would use the remaining 15 million to cover transaction costs.

NEXTDC said its NSW facilities had hit 70 percent capacity and it expects to secure more contracts in the near term.

The third facility will be located in Gore Hill, over 7kms away from its other two datacentres.

The new facility is expected to have an initial capacity of 12MW. Construction is expected to be completed by July 2022. Eventual capacity will be 80MW.

NEXTDC CEO Craig Scroggie said demand had driven the new initiative.

“NEXTDC is confident that the projected demand in Sydney, together with our return expectations, warrants the next phase of investment in Sydney’s third generation of datacentres," he said in a statement to the ASX.

The company said it has seen increased demand from hyperscale cloud computing customers.

The worst kept secret in the industry is that NEXTDC is where Microsoft hosts its Azure platform in Australia.

The company also reaffirmed its earnings guidance saying revenue for the year would be between $200 million and $206 million.