Colt targets new data centre investment in Hong Kong
London-based Colt Group looks for investment targets in higher-growth markets following the takeover of Japanese data centre operator KVH
Colt Group plans to pursue acquisitions and investments in Hong Kong and on the mainland after completing its 18.6 billion yen (HK$1.25 billion) takeover of Japanese data-centre services operator KVH.
"The KVH acquisition provides us with a launch pad into Asia, where there are higher-growth markets for information and communications technology services," said Rakesh Bhasin, the chief executive of the European information and communications technology services provider, yesterday.
"We have no debt on our balance sheet, and we can easily raise up to €300 million (HK$2.9 billion) to tap opportunities in the Asia-Pacific … we will be adding [data centre] capacity in Hong Kong, as well as work with mainland regulators and local governments on [investment] opportunities in the broader China market."
London-based Colt's purchase of KVH followed the European firm's corporate restructuring early this year, which involved its withdrawal from the low-margin carrier voice-trading business. Its four main businesses now cover network, data centre, information technology and voice, in selected markets.
The deal, which is expected to close next month, is a related-party transaction as US financial services group Fidelity Investments and associated companies wholly own KVH and control 62.54 per cent of Colt.
Founded in 1999, Tokyo-based KVH operates similar businesses to Colt. KVH has about 2,000 multinational corporations and network services providers as customers across the Asia-Pacific region. It also targets similar information-intensive industries, including financial services, media, telecommunications and internet services, and professional business services, such as legal and insurance.
In a regulatory filing on Wednesday, Colt said the global economic downturn as well as the earthquake, tsunami and Fukushima nuclear disaster in Japan in 2011 affected the demand for network and data centre services in Japan.
Many non-Japanese multinational firms relocated their regional operations from Tokyo to Hong Kong and Singapore, it said. That led KVH to become more aggressive in expanding outside its home market.
KVH launched its "DCNet" data centre-to-data centre interconnection service in July to provide companies with greater choice in where they co-locate their systems. DCNet is being rolled out to link facilities in Japan, Hong Kong, Singapore and the US.
"We will now have the capability to deliver seamless network, data centre and IT services to multinational corporations across more geographic markets," Bhasin said.
Colt, with operations in 22 European countries, expected KVH's new strategy "to produce sustained growth over the next five years".
Colt, which posted €1.58 billion in revenue last year, recently secured a revolving credit facility of €150 million to fund that acquisition and future investments.
Bhasin said the KVH data centre in Tseung Kwan O was a leased facility. "We will work closely with the Hong Kong government to look at opportunities to build our own data centre," he said.
Frost & Sullivan has forecast that Hong Kong's data centre market will reach US$802.6 million by 2019. Large data centres in the city tend to cluster in the districts of Tsuen Wan, Kwai Chung, Sha Tin, Kwun Tong, Kowloon Bay, San Po Kong, Quarry Bay, Chai Wan and Tseung Kwan O.
