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The investment arm of Legal & General has taken a 50% stake in wholesale colocation company Kao Data to support the expansion of its datacentre campus in Harlow, Essex.
The company opened the first of four 8.8MW datacentres it has planned for the £230m campus a year ago, and said at the time that the others were set to go live in due course.
Legal & General Capital’s involvement in the company came about through its partnership with existing Kao Data investor Goldacre Noé Group, according to a press statement about the deal.
“This significant partnership is a landmark moment, both for the continued growth of Kao Data and for the development of the wider UK datacentre industry,” said Goldacre founder David Bloom.
“With this substantial injection of capital, Kao Data is uniquely well-placed to strengthen its position as an innovative, performance-led business. An ever-increasing digital footprint is the basis of our entire digital economy, and we are proud to provide the platform that makes this possible.”
While the statement makes no reference to the size of the investment, a report in The Times confirmed that the deal means Legal & General Capital now has a 50% stake in the company.
Colocation datacentres are often viewed as favourable, long-term bets by the investor community because tenants tend to sign multi-year leases, which means they should get a stable and recurring return on their outlay.
Matteo Colombo, director of strategic private capital investments at Legal & General Capital, said the firm’s interest in the sector comes down to realising the central importance of datacentres, and the growing role they play in keeping the digital economy ticking over.
“As technology continues to evolve and our future cities become more connected, we see datacentres as critical infrastructure of national importance,” said Colombo.
“At a time of increased sensitivity around data sovereignty, the UK lacks its own flagged datacentre platform. We see a market gap, and Kao presents a unique opportunity to build and create a leading UK proposition.”
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Meanwhile, the Kao Data facility has created some waves within the colocation sector to date, because it is such a rarity for a wholesale-only colocation company to set up shop, given the high startup costs, as well as the sheer amount of land required.
According to Kao Data, the design of its facilities are inspired by how the hyperscale cloud giants build out their datacentres, with the firm opting to kit out the site with technologies from the Facebook-backed Open Compute Project open source initiative.
“The Kao Data platform has been well received by the critical industry engineering community, end customers and colocation service providers from Europe, the US and the Far East,” said Kao Data CEO Jan Daan Luycks.
“Now, with the financial backing of Legal & General as a major investor, Kao Data has the opportunity to extend its reach and bring high-efficiency, high-resiliency and highly-connected wholesale datacentres to new customers both in the UK and new regions.”
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