Through the credit crunch to successfully navigating the UK’s ‘Brexit’, NGD has survived and thrived by daring to be different. Following the company’s recent partnering with French-owned Infravia Capital Partners we look back at how NGD became the operator of Europe’s largest data centre and what’s next.
Based on the buoyant historic and forecast growth figures for the colocation and cloud computing sectors, being able to succeed in the data centre operator business appears to be a no brainer. Just find a suitable site, connect the power, build and fit out the facility with the necessary electro-mechanical infrastructure, then open your doors for business and they will come.
If only it were that straightforward. The business is highly capital intensive - as many ‘wanna be’ operators can testify – and one which burns cash at a potentially lethal rate if not carefully managed. Dominated by a few large groups which can prove daunting to start-ups, it can be slow moving with often protracted sales cycles not to mention the red tape over such matters as planning permissions and compliance. It’s no surprise therefore that many new build projects never make it off the drawing board, and if they do, take many years to turn a profit.
Despite these significant challenges and through the worst credit crunch in living memory this is the story of NGD, an independent data centre operator which against the odds has not only survived but consistently increased sales and profitability since opening for business in 2010. A company which has thrived by daring to do things differently and along the way has helped transform the UK data centre industry.
Eight years ago in the midst of the worst credit crunch in living memory former telecom executives Simon Taylor and Nick Razey were preparing to commence the initial transformation phase of a derelict semiconductor factory near Cardiff into a world-class data centre. Known locally as 'the white elephant', the 750,000 sq ft building, equivalent in size to London Heathrow’s Terminal 5, had been standing empty for ten years.
Having leased the site from the Welsh government on favourable terms and by using their own money, additional funds from private ‘friends and family’ investors and a line of credit from RBS, Taylor and Razey had high hopes of attracting global corporations into using their facility for storing and processing precious data. Offering hitherto unprecedented levels of space, power and physical security, the facility would be a kind of luxury grand hotel - for computers.
However, when the London-based competition and industry pundits got to hear of NGD’s out of town plans they said it wouldn't work. They claimed that when it came to data centres the conventional wisdom of the past 20 years would prevail: corporations only ever considered London and the surrounding area. Why would they now decide to move out to Wales?
Undaunted, the NGD team moved ahead having foreseen a time, not so very far away, when the vast volume of data and information generated by the Worldwide Web, smartphones, not to mention cloud computing would no longer be capable of residing in crowded metro area data facilities such as London’s.
After all, even back then in 2008, they could see that many companies, government organisations and research establishments in the UK and US were already finding it increasingly hard to cost-justify keeping computer servers in their own computer rooms or data centres as the sheer growth in data was making it untenable. Post London 7/7 and New York 9/11 also meant security was becoming an increasing priority due to the increased risk of terrorism.
All of this pointed to a UK ‘out of town’ data centre revolution – and NGD was at the forefront.
Fast forward to 2016 and that semiconductor plant near Cardiff has been transformed into Europe’s largest data centre campus and home from home to an impressive and growing list of blue chip corporations' data. These include BT and CGI – NGD’s original anchor tenants - UK government departments, global IT giants such as IBM and Wipro, and most recently the world’s largest software company. All have recognised the unrivalled quality and quantity of rack space, and most importantly, the abundant power on offer compared to London – and at half the price.
In late 2015, spurred on by closing their largest contract to date and having posted record year end results, Taylor and Razey decided it was time to take the company to the next level. Even though some 100,000 sq ft had been built out and occupied there was still plenty of unused capacity available – around 350,000 sq ft (4 soccer pitches)!
It was evident significant new funding was needed in order to maximise the growth and profit potential from leveraging the growing economies of scale of the giant facility and meeting strong demand for more and more data hall capacity. This was both for accommodating existing customer Big Data, Cloud Computing, High Performance Computing and Internet of Things operations, as well as addressing forecast new business demand with NGD looking to ramp up sales from more major corporations and IT services businesses headquartered in North America and Asia.
Following extensive discussions with US and European based private equity firms NGD selected French-owned Infravia Capital Partners. Despite the unsettling ‘Brexit’ market conditions, in a deal valued at £100M, Infravia agreed to acquire a significant stake in the NGD business. The necessary growth capital is now available for expanding NGD’s flagship data centre campus operation, as well as for acquiring a second backup facility in Bristol, connecting additional transatlantic fibre network communications infrastructure, and meeting international business development costs.
As one of the very first post-Brexit agreements NGD’s perhaps stands out all the more having involved substantial overseas investment from a major EU investor organisation specialising in the infrastructure sector.
Then again, perhaps not so surprising, bearing in mind Taylor and Razey’s enviable reputation and track record for surprises in an industry that for too long had become rather used to resting on its laurels. Their blazing the trail for high quality out of town facilities has ensured data centre users now have far greater choice and peace of mind than ever before.