Led · Equity · Jul 2022

Kao Data develops and operates data centres specifically engineered for AI and advanced computing. It plans to use new capital to build additional data centres across the UK and Europe to meet rising demand for AI model training and deployment. The company completed a £206m debt raise with Deutsche Bank, with an option for the lender to extend the facility to £356m. Kao has restructured its finances with support from its shareholders and will consolidate debt under a single financial services organisation. Proceeds from the raise will repay existing lenders, including Downing LLP, and support its recent and planned facility projects such as a £350m Manchester investment announced last year and a completed Harlow facility. Kao Data is a London-based developer and operator of data centers serving enterprise, cloud, high-performance computing (HPC) and artificial intelligence customers. The company received an undisclosed equity investment from Infratil and Legal & General Capital. Infratil will hold a 53% majority stake and Legal & General Capital will hold 32%; founding investor Goldacre NOÉ Group will retain 15%. Kao Data intends to use the funds to accelerate its plans to scale across the United Kingdom. Its London facilities are carrier-neutral and provide OCP-Ready and DGX-Ready environments for advanced computing workloads. The article does not disclose the investment amount, prior rounds, or operating metrics. Kao Data provides colocation services for enterprise, cloud, high-performance computing (HPC) and artificial intelligence organizations, with customers including Nvidia, the European Bioinformatics Institute and financial services firms. Founded by Goldacre in 2014 and operational from 2018, Kao owns a 15-acre Harlow campus north of London and has built one carrier-neutral facility there; it plans to begin a second facility prior to the financial year ending March 31, 2022 and ultimately develop four data centers on the site. The Harlow campus sources 100% renewable power and has a design PUE of <1.2. Kao has signed a conditional agreement to acquire two UK data centers via a sale-and-leaseback from a FTSE 100 financial services business, which will become the anchor tenant; completion is expected by March 31, 2022. Post-acquisition the portfolio will comprise 12.3 megawatts of installed power across three existing data centers, with potential to develop six data centers and 55 megawatts of aggregate power capacity. Pro forma contracted run-rate rental revenue is £13.3m; the company forecasts an EBITDA loss of less than £5m for the year ending March 31, 2022 but projects breakeven EBITDA within two years. Kao’s weighted average remaining client contract life is over nine years and the company and its investors target building a £500m multi-site data-center business with further development and acquisition opportunities in the UK and potentially beyond.