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Essex AI data centre firm completes £206m debt raise

AI data centre Image credit: Kao Data

Kao Data, an Essex-based company that builds data centres for AI and advanced computing, has completed a £206m debt raise from Deutsche Bank.

The funds from the Frankfurt-headquartered bank will support Kao’s plans to scale its AI data centres across the UK and Europe.

The company said the new financing will fast-track its new contracted developments with customers in AI, cloud and financial services as well as support the KLON-06 data centre in Slough.

The debt facility will allow Kao to consolidate its existing debt and repay existing lenders, including investment manager Downing LLP.

Tom Phillips, head of institutional business development at Downing said: “We are proud to have helped the company establish a firm foothold as a leader in one of the world’s most competitive, international data centre markets, whilst also delivering a successful return for our funds.”

The debt facility, which is extendable to £356m, comes amid a global surge in demand for AI compute infrastructure, which has been highlighted as a particular priority in the UK.

Chancellor Jeremy Hunt announced hundreds of millions in state funding to support British compute capabilities across the last two budget statements. The most recent announcement came in autumn, when Hunt earmarked £500m to extend the £900m funding package revealed last spring.

UK Research and Innovation (UKRI) announced on Wednesday it was accepting funding applications from organisations with the ability to host large-scale compute systems for use in AI.

The government funding for compute infrastructure was in response to the 2023 publication of the independent Future of Compute review that recommended bolstering Britain’s computing capabilities to capitalise on advancements in technology.