Temasek Holdings explores acquisition of ASX-listed Nextdc

Data centre interior.

Singapore’s state investor Temasek Holdings is reportedly looking to acquire ASX-listed Nextdc Ltd, a data centre services firm, according to a report by The Australian.

Founded in 2010 and headquartered in Brisbane, Nextdc provides data centre outsourcing solutions, connectivity services and infrastructure management software. It maintains a series of data centres in key Australian cities that include Brisbane, Canberra, Sydney, Melbourne and Perth.

As at 12 February 2018, the firm has a market capitalisation of A$1.71 billion ($1.33 billion). In the financial year 2017, Nextdc reported a profit estimated at A$23 million, a substantial increase over the A$1.8 million profit it posted for FY 2016.

US private equity player Blackstone Group has been preparing a takeover bid for Nextdc’s spin-off, Asia Pacific Data Centre Group, according to Australian media reports. This development has also driven increased investor interest in Nextdc, which recently rejected a buyout offer for the Asia Pacific Data Centre Group, in which it retains a significant stake.

Temasek counts ST Telemedia, a major data centre player, in its portfolio. This interest in Nextdc represents a consolidation of its data centre interests as hyperscale public cloud service providers have been key in driving demand for data centre services in Australia, particularly in the cities of Sydney and Melbourne, with the firm also keen to expand its holdings in Europe.

In October 2017, ST Telemedia Global Data Centres (GDC), its data centre unit, acquired Virtus Data Centres, a UK-based data centre provider. The same month also saw Temasek-backed Mapletree acquire a portfolio of 14 US data centres for $750 million; a joint venture (JV) of Mapletree Investments and SGX-listed Mapletree Industrial Trust (MIT) purchased the server centres from Carter Validus Mission Critical REIT, a non-traded real estate investment trust sponsored by US commercial real estate firm Carter Validus, through its vehicle Mapletree Redwood Data Centre Trust.

A January 2018 report by Research and Markets notes that international global public cloud providers such as Amazon Web Services, Microsoft, and Google have significantly increased their uptake of wholesale data centre capacities in recent years in Australia, with escalating costs in the Sydney CBD region driving Australia’s cloud providers and multi-national corporations (MNCs) to base their local operations in other Australian cities.

Perth is emerging as an attractive city in terms of international connectivity to global markets, especially given the ongoing construction of the APX-West subsea cable linking Perth to Singapore. APX-West is due for completion in 2018.

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