Next Generation Data explores listing

Next Generation Data, operator of Europe’s largest data centre, is considering a flotation on the London stock market early next year to fund further development on the site.

The group runs a site with a capacity of 90MW at Newport in South Wales, larger than the total network capacity of Telecity, the FTSE 250-listed data centre provider.

The price for the flotation is not clear, but the group has invested £200m ($301m) in the 750,000 sq ft site – roughly the size of Heathrow Terminal 5 – and has BT and Logica as its two main clients. It was founded by Simon Taylor, chairman, and Nick Razey, chief executive, who worked together at Cable and Wireless in the 1990s before co-founding Interoute, the fibre network provider.

Mr Razey told the Financial Times NGD was in talks with major US software and banking groups looking for space for cloud computing and trading operations. However, to kit out more space at the Newport site would require further funds and NGD has appointed KMPG as its financial advisers. “We’re looking at a stock market flotation in the first or second quarter of next year,” Mr Razey said.

The group is also betting on a fundamental shift in attitudes in the data centre market. The financial crisis crimped demand for capacity and halted the development of new projects. While demand has returned, few new development sites have started this year, although Telecity has announced plans to increase capacity around London.

Nevertheless, it has been an industry in which the largest UK centres have been based within 50 miles of London, usually within easy reach of corporate headquarters. However, power is becoming the largest headache for operators and customers.

The average data centre consumes the energy equivalent to 25,000 households while energy consumption per server within the centre is rapidly growing. However, the UK must reduce emissions after the introduction of the Carbon Reduction Commitment on April 1.

A quarterly study by Jones Lang LaSalle, the real estate professional services group, in April found that opinion in the industry had shifted in the past few months in favour of operating more remotely based sites. Around 70 per cent of industry respondents said they would consider a data centre more than 200kms away from their facilities provided there was at least a 20 per cent reduction in operating costs. This compared to 44 per cent from the previous survey in January. NGD Europe says it offers more than 50 per cent savings over London-based data centres on space alone.