NxtGen picks Avendus for $300 mn fundraise

“The company has been in the market for some time but has recently appointed Avendus for the fundraise," one of the people said, adding it has held talks with several investors. “If the round goes as planned, it will be its largest to date," the second person said.

NxtGen did not respond to a request for a comment, while Avendus declined to comment.

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The company last raised $13.5 million in 2015 from investors including International Finance Corp., Axon Partners Group and Intel Capital as part of its series B funding round. It competes with companies such as Vantage Data Centers, Princeton Digital Group and Aligned, according to market intelligence provider Tracxn.

NxtGen focusing on enabling businesses with scalable, secure, and cost-efficient infrastructure across public, private and industry clouds, the company's website states.

PE firms bet big on data centers

Several large private equity firms including Blackstone, Everstone and Brookfield have backed Indian data center companies either through joint ventures or direct investments.

Blackstone launched a data center platform called Lumina CloudInfra and plans to invest more than $300 million in a Navi Mumbai hyperscale data center, while Reliance Industries entered the fast-growing segment last year in partnership with Canada's Brookfield.

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In 2021, Everstone Group formed a joint venture partnership with Yondr Group, a global developer, owner-operator and service provider of hyperscale data centers, to deploy $1 billion to develop data centers in India.

NxtGen's services are particularly crucial at a time when tech giants and geopolitical groups are leveraging data from emerging economies, raising concerns about dependence on foreign cloud infrastructure. According to the company, this has led to stricter privacy policies that emphasize data sovereignty, control and long-term governance.

India's data center market

India’s data center market is expected to grow to $10.09 billion by 2027 from $4.35 billion in 2021 at a compound annual growth rate (CAGR) of 15.07%, according to a CBRE report published in May 2024. The report highlighted that the burgeoning artificial intelligence industry is at the forefront of this growth as massive amounts of the data it generates requires more robust storage and processing capabilities.

Over 90% of the new data is expected to be concentrated in major cities such as Mumbai, Chennai, Delhi-NCR, Bengaluru and Hyderabad, CBRE said, adding that leading players are also exploring untapped markets such as Kochi, Jaipur, Ahmedabad, Lucknow, Patna and Visakhapatnam as they could fuel the next wave of data center growth.

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Last month, NxtGen outlined plans to deploy 12,000 GPUs by May as demand for AI computing continued to grow in India, according to a report by Businessworld. It currently has over 1,000 GPUs, including Nvidia L40S and H100 models.

According to the report, the company's founder and chief executive officer AS Rajgopal estimated that the NxtGen will need a few billion dollars over the next three years and may also evaluate a public listing based on investor interest. It has over 400 employees and plans to hire more AI engineers to meet the demand.

In FY23, the company reported consolidated revenue from operations of $24.9 million, up from $23 million a year earlier. It posted a loss of $10.6 million compared to $5.4 million in FY22, according to a report by Tracxn.