NextDC targets $100m to build data centres

Launches IPO, wants ASX listing.

Data centre operator NextDC will attempt to raise $40 million through an initial public offering this year, after securing a credit facility for another $40 million.

The company also hoped to be listed on the Australian Stock Exchange by December 13, according a prospectus issued today.

NextDC - formed by ex-PIPE Networks' Bevan Slattery - planned to build carrier-neutral data centres in Brisbane, Melbourne and Sydney in the first instance.

But it was also eyeing a broader network of facilities.

"Subject to satisfactory completion of the initial facilities and customer demand, NextDC intends to investigate developing further space and facilities throughout Australia and New Zealand," Slattery and chairman Roger Clarke said in a joint letter in the prospectus.

It had been mulling an IPO and ASX listing since June as it sought to raise capital to fund its construction projects.

The company received a $20 million injection from Slattery when it formed earlier this year.

It hoped to use the $40m IPO proceeds for construction, refurbishment and technical fitout costs ($35 million), administration and unallocated working capital ($3 million) and to cover costs associated with the offer ($2 million).

"With total equity and debt funding of up to $100 million, the directors believe that NextDC will be well-positioned to meet the requirements of corporate and government customers in its initial data centre facilities and target markets during the coming years," the company said in a statement.

New details on facilities

NextDC hoped to have 1000 square metres of space available in its Brisbane data centre in March next year.

The facility - capable of supporting a technical area of 2,250 square metres - was said to be a "solid concrete building located in the Brisbane central business district".

The technical area would be spread over six storeys fitted with high load-bearing floors. The building was also "located adjacent to 7 carriers' fibre connections and had a planned 6MVA high voltage power supply to the site".

The company had also bought land in Port Melbourne and had "detailed plans for an approximately 15,000 square metre building with a total technical area of 6,000 square metres".

It hoped that facility would be online in November 2011.

NextDC said it was "assessing opportunities" for a data centre in Sydney, which it hoped would be sized between 3,000 and 5,000 square metres of technical space.

The Sydney facility would almost certainly be funded using a credit line secured from a "major Australian bank".

The credit would be available in two tranches - $17.35m and $22.65m, the prospectus said.

"NextDC expects that the loan facility will be fully drawn on completion of the technical fit our for all initial facilities and the potential site in Sydney," the prospectus said.

Rental levels

The company hoped that enterprises with in-house data centres and server rooms would eventually decide to outsource the facilities to third party operators.

It also saw demand for space being driven by internet traffic and cloud computing.

It produced several analyst reports, including from IDC and Frost & Sullivan, to demonstrate the shortage of carrier-neutral space in the market - and the potential asking price for space.

"The directors believe that recent data points suggest rental levels are in the range of $3,400-$4,000 per square metre (for 1kW of power capacity)," Slattery and Clarke said.

Staffing

The prospectus also revealed that NextDC planned to have between 75 and 80 staff once the initial fitout of Melbourne and Brisbane and the acquisition of a site in Sydney was completed.

It said that chief executive Slattery was contracted until 31 December 2016 with an annual salary of $250,000.