NextDC to acquire 20 percent stake in AUCloud as it expands into enteprise

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NextDC to acquire 20 percent stake in AUCloud as it expands into enteprise

NextDC is set to acquire a stake in ASX-listed sovereign cloud infrastructure-as-a-service (IaaS) provider AUCloud for $17 million.

The colocation provider will be investing the amount as part of a larger $35 million placement to issue some 70 million shares, where NextDC will secure a 19.99 percent stake and become an AUCloud partner.

AUCloud, trading as Sovereign Cloud Holdings Limited, said the proceeds will be used to expand its operations and move into the enterprise space, including investing in new cloud platforms in Brisbane, Melbourne and Adelaide. Prior to this investment, AUCloud focused exclusively on the Australian Government, defence, intelligence and Critical National Industry (CNI) communities.

“NextDC has an in-depth understanding of the underlying cloud market dynamics gained through our national network of premium data centre facilities across Australia,” NextDC chief executive Craig Scroggie said.

“Following the injection of growth capital into AUCloud, we believe Phil and the team are very well positioned to benefit from the increasing trend towards sovereign IaaS cloud and high security solutions.”

The capital raise has opened today with an institutional entitlement offer, with a retail offer launching next week on 29 November 2021. The transaction is expected to complete by 22 December.

More investments AUCloud plans to make include upgrades for storage and compute, as well as hiring more engineering, sales, marketing and operations staff.

NextDC will also be able to appoint a director to join AUCloud’s board, which AUCloud expects would be CEO Craig Scroggie initially.

AUCloud chief executive Phil Dawson said, “We continue to see a trend towards greater emphasis on sovereign cloud services to ensure all data remains within Australian legal jurisdictions.

“Our strategic partnership with NEXTDC, a leading provider of premium data centre facilities, will provide access to a powerful national network of 1,500+ enterprise customers and 730+ channel partners.

"This equity raising capitalises AUCloud to extend its platform footprint into Brisbane, Melbourne and Adelaide, and expand its customer reach into the large security-conscious enterprise market.”

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