This month we highlight Next DC (NXT.ASX) as a shariah compliant investment. 

Founded in 2010, NextDC is an Australian  market leading builder, owner and operator of data centres with a portfolio of 9 operational assets in Australia, and a further two in development.

Data centers are, at a very high level, the critical infrastructure and backbone that provides digital connectivity in modern society – they are the data warehouses and facilities that enables software to be stored and shared both through applications and data.  Without realising it, in using a smartphone, computer or tablet you are likely to be using a data centre either directly or indirectly every day.  They have become an essential part of the social infrastructure we rely on in today’s digital world.

Historically, data centers were largely owned and operated in-house by companies with the aid of IT consultants. With the advent of and increased use of cloud computing and technology, and shift to online gaming, streaming and demand for faster speeds, independent data centre operators like NextDC  have evolved to provide carrier neutral services to enterprises and government, as well as hyperscale cloud service providers like Amazon, Google and Microsoft.  

Security, accuracy, reliability, and often sovereignty, of our IT infrastructure is also critical. Next DC is an industry leader globally, providing government and industry with a world-class option for their IT infrastructure requirements. This may not seem important at first, but for some applications, legislation requires Australian ownership of assets – without NXT in the Australian market, there would be a lack of coverage of world-class colocation data centers that aren’t foreign owned.

Data centres are large users of power and water (for cooling).  Next DC have a strong focus on sustainability and the associated carbon footprint. Data centers measure efficiency in Power Usage Effectiveness (PUE), an internationally accepted metric. With proprietary software to manage heating and cooling, as well as a strong focus on efficiency, Next (1.4 PUE) are significantly better than the Industry average (1.7 PUE). Moreover, they have a strong commitment to carbon neutrality and have implemented the Task Force on Climate-related Disclosures (TCFD) recommendations. They have a target of 100% renewable energy, and although relatively immaterial, the decision to install solar arrays on their assets is testament to their commitment to sustainability (which they first attained in 2018 through a partnership with Qantas’ QFP carbon offset program). Moreover, Next offer a carbon neutral option under the NEXTneutral brand, ensuring they partner with customers in minimizing the carbon footprint from their operations. 

 

One of the main advantages of independent data centres is they enable different customers and users to collocate in the same complex, providing economies and benefits in terms of latency, power savings and ultimately cost savings. As digital network solutions have become increasingly complex and costly the need to have dedicated service providers that offer technical back-up and support of mission critical services has become increasingly important. 

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Chief Investment Officer

Strategic leader with 19 years of industry experience and over 7 years in executive and senior management positions leading small to medium sized multi-functional operations in the funds management and superannuation industry. A record of delivering outstanding investment outcomes for members and a proven track record in driving member engagement through investment education and insights.

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