Nextgen still Australian after sale to Canadian teachers, says CEO

Nextgen Group CEO Peter McGrath said growing demand from Australian businesses for data sovereignty remains a key advantage for Nextgen even after a Canadian investment group took 70 per cent control of the business.

Under the agreement finalised last week, the Ontario Teachers’ Pension Plan (OTPP) took a 70 per cent controlling share in Leighton Telecommunications and merged the Nextgen Networks, Metronode and Infoplex brands under a single name, Nextgen Group. Leighton retained a 30 per cent share of the company, giving it a seat on the board of directors.

While a Canadian entity is now the company’s principal investor, McGrath told Computerworld Australia that NextGen remains an independent Australian company that will keep its technology and customers’ data in this country. OTPP is a passive, financial investor, and the local Nextgen management team will remain largely the same.

“I don’t think there’s any issues there at all with data sovereignty,” he said. “We see data sovereignty particularly for governments and large corporates all about them feeling comfortable that the data is in reach.”

Nextgen’s Metronode business will continue to maintain and build new data centres in Australia, he said. The company is constructing a data centre in Perth that is expected to launch at the end of the third quarter. Other upcoming data centres will be built in Canberra, Sydney and Illawara, he said.

Leighton Holdings’ decision to accept an offer from OTPP largely came down to price, McGrath said. OTPP paid $619.5 million to purchase the 70 per cent stake in the business. Also, Leighton determined that OTPP was a long-term equities fund that would not flip assets after a few years, he said.

The investment lets Nextgen continue to expand the geographic reach of its network in Australia, said McGrath, adding that the company aspires to be the leading alternative to Telstra for data services.

The combination of Nextgen Networks, Metronode and Infoplex under the Nextgen Group brand names provides synergies, he said. “We’re now able to take the full product set to our various different customers, whereas previously they were acting a little bit as silos and there wasn’t particularly good cross-sell.”

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