Vendor Financing Risks Loom as NEXION Exits Data Centre Business
NEXION Group has completed the sale of its data centre subsidiary to Carrier Connect for AUD 2.5 million, marking a strategic shift to sharpen its focus on core network and AI software businesses.
- Sale of Nexion W1 DC Pty Ltd for AUD 2.5 million completed
- Transaction includes upfront payment, deferred payment, and vendor financing
- NEXION retains customer invoicing and pays wholesale rack rental to Carrier
- Carrier assumes all data centre operating costs and pays NEXION for maintenance
- NEXION relocates registered office to West Perth, WA
Strategic Divestment Completed
NEXION Group Ltd (ASX – NNG) has officially closed the sale of its wholly owned subsidiary, Nexion W1 DC Pty Ltd, which owns the Nexion data centre, to Canadian-listed Carrier Connect Data Solutions Inc. for AUD 2.5 million. This transaction, first announced in May 2025, represents a pivotal moment for NEXION as it pivots away from direct data centre ownership to concentrate on its core competencies in network services and AI-driven software solutions.
Financial Structure and Terms
The sale consideration is structured with a modest upfront payment of AUD 200,000, a deferred payment of AUD 100,000 due six months post-closing, and a substantial AUD 2.2 million vendor financing arrangement. This financing carries a 9% interest rate and is repayable over five years, with monthly payments calculated on a 25-year amortization schedule, culminating in a balloon payment. This arrangement not only provides NEXION with immediate liquidity but also a steady income stream from interest, enhancing its financial stability.
Operational Continuity and Collaboration
Despite the sale, NEXION will continue to invoice its customers directly, maintaining revenue stability for the group. The company will pay Carrier a wholesale rental rate for the rack space its customers occupy within the data centre. In return, Carrier assumes full responsibility for operating costs and will remunerate NEXION AUD 120,000 annually to perform daily operations and maintenance. This arrangement ensures operational continuity for customers and leverages NEXION’s expertise in data centre management without the capital burden.
Carrier Connect’s Expansion Strategy
Carrier Connect Data Solutions, headquartered in Vancouver with a presence in Perth, focuses on consolidating Tier II and III data centres internationally, targeting AI companies, service providers, and enterprises. The acquisition of NEXION’s data centre aligns with Carrier’s strategy to expand its footprint in key markets, offering carrier-neutral, fully owned infrastructure to a growing client base. This move could enhance Carrier’s competitive positioning in the Australian and global data centre landscape.
NEXION’s Future Direction
With the sale completed, NEXION has also updated its registered office to Level 1, 1 Altona Street, West Perth. The company signals a sharpened focus on its Networks and Business Intelligence/AI divisions, aiming to leverage its hybrid-cloud and AI-driven solutions to drive growth. This divestment frees up capital and management bandwidth, positioning NEXION to better compete in the evolving technology sector.
Bottom Line?
NEXION’s data centre sale marks a strategic reset, but vendor financing risks and Carrier’s operational success will shape future outcomes.
Questions in the middle?
- How will Carrier Connect manage the vendor financing repayments over the next five years?
- What impact will the sale have on NEXION’s cash flow and profitability in upcoming quarters?
- Will NEXION’s focus on AI and network services translate into accelerated growth post-divestment?
