Legal & General has taken a 50% stake in a £230m data centre development project as part of its commitment to support smart city initiatives.
The insurance giant has signed a partnership agreement with existing investor Goldacre to provide “substantial investment” for the Kao Data Campus.
Legal & General called the deal the first step of an ambitious partnership to drive the strategic expansion and accelerated growth of the UK data industry.
Kerrigan Procter, CEO of Legal & General Capital, said his firm will “focus on creating thriving cities” and make investments “that are focused on creating sustainable communities with good employment opportunities, high quality and varied housing in a digitally-connected and clean environment”.
He said: “We believe that data centres are an integral part of a city’s digital transformation, enabling connections to a broader digital infrastructure and offering synergies across our wider Future Cities investment strategy.”
Kao Data opened Kao Data London One, the first of four 8.8MW data centres, at its 160,000 sq ft data campus in January last year to supply digital infrastructure for future cities. The funding from L&G will support the construction of the further three data centres.
Named after Nobel Prize-winning physicist Sir Charles Kao, the facility is supporting hyperscalers (large companies like Google and Amazon using private hosted cloud infrastructure services) and enterprise customers across Europe. It’ll also offer connectivity routes from Dublin to Amsterdam.
Accelerating smart cities
Strategically positioned in the London and Cambridge corridor, Kao offers on-demand, secure computing services aimed specifically at data-driven industries including banking, media, gaming, life sciences and retail.
The investment from Legal & General will allow Kao to explore new opportunities across a range of industries and geographic locations.
For Legal & General, this deal marks its foray into a fast-growing and highly lucrative market. According to Digital Realty, a real estate investment trust company, the UK data centre market will top $135bn (£105bn) by 2025.
Matteo Colombo, director of strategic private capital investments at Legal & General, said data centres are of “national importance” as cities become increasingly interconnected.
He said: “At a time of increased sensitivity around data sovereignty, the UK lacks its own flagged data centre platform. We see a market gap, and Kao presents a unique opportunity to build and create a leading UK proposition.
“Legal & General is pleased to have invested in Kao and to have taken a lead role alongside Goldacre in building out the business, which is one of the first major new UK data centre companies since 2008.”
David Bloom, founder of Goldacre, added: “This significant partnership is a landmark moment, both for the continued growth of Kao Data and for the development of the wider UK data centre industry.
“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.
“Given the importance of our national data industry, we look forward to working with Legal & General to create further opportunities to accelerate the emergence of the infrastructure nationwide.”