NextDC, thecountry’s largest listed developer and operator of...

NextDC, thecountry’s largest listed developer and operator of data centres, is raising$1.32 billion to expand in Sydney and Melbourne amid record demand for cloudcomputing services and an artificial intelligence boom.

Shares inNextDC have surged 51.6 per cent over the past year, as investors clamour forexposure to data centres, one of the hottest assets given their key role in AIand other products that require massive computing capacity.

NextDCshares were halted on Thursday morning as the company launched a one-for-sixentitlement offer at $15.40 a share, a 7.8 per cent discount to its lastclosing price. Chief executive Craig Scroggie said a surge in demand hadprompted NextDC to bring forward its capital investment.

NextDCchief Craig Scroggie says Australia should consider nuclear energy to powerdata centres. James Brickwood

“NextDCcontinues to see significant growth in demand for its data centre servicesunderpinned by powerful structural tailwinds,” he said.

“Amid thisbackdrop, we have decided to bring forward the development and fitout of keyassets in Sydney and Melbourne to ensure we are able to meet this growth indemand, continue to support our customers.”

NextDC isnot the only data centre operator benefiting from a jump in demand for cloudcomputing. AirTrunk – privately owned by Macquarie Asset Management, PSPInvestments and its founder, Robin Khuda – has soared to a valuation of morethan $15 billion, from just $3 billion four years ago. Its owners areentertaining bids, The Australian Financial Review’s Street Talkcolumn has reported, with plenty of interested parties.

NextDCoperates 13 data centres and is developing another nine centres,including newbuilds in Malaysia and New Zealand.

InFebruary, the Brisbane-headquartered company revealed plans to open its firstso-called AI factories – data centres specifically designed to house theprocessing units sold by chipmakerslike NVIDIA.

Mr Scroggiesaid the facilities were likely to require 10 times the amount of energy usedto power the current generation of data centres as well as new cooling methods.“We’re going from general purpose computing to high-performance computing. Thatwill see a generational change both in the scale and the density of computers,”he said.

Mr Scroggiesaid the demand for the higher-performance computing services would need to besupported by new energy infrastructure.

“We needpower, we need transmission networks, we need green energy, we need more solar,we need more wind and, frankly, we need nuclear,” he said. “We have to find netzero power options that are capable of supporting energy needs when the sun isnot shining and the wind is not blowing and batteries [are] not going to cutit.”

The companyhas not disclosed where its first AI factory would be built. Wilsons analystRoss Barrows said he had hoped to see more colour on NextDC’s AI facilities inThursday’s announcement.

“Thecapital being raised today goes a considerable way to materially expeditingbuilt capacity at its existing assets and accelerating the delivery of itsdevelopment assets, but further insights into new AI-dedicated assets wouldhave added to our understanding of NXT’s medium term growth plans,” Mr Barrowssaid.

E&PCapital’s Paul Mason said NextDC’s fundraising would find plenty of supportamong investors. “The raising is probably not a big surprise for many. We havebeen forecasting another raising in the next two years in our modelling of thecompany as a result of the very high levels of demand and associated very largebuild program the company is pursuing,” he said.