A good trading update from IX Europe this morning shows strong demand for datacentre space - particularly from the financial services sector, at its new London 4 datacentre. Over 15% of capacity is already committed andthe company is accelerating its fitout programme.
There are fewer opportunities for portfolio investors in the hosting and datacentre sector than there used to be, with Telecity taken out by 3i and Redbus by Telecity. But IX Europe looks interesting. The share price has risen from 30p to 50p plus over the past few months and it does seem that the company is seeing its potential recognised.
I've always liked recurring revenue plays and I've always liked hosting and datacentre business. The economics now look good; the savage price erosion we saw over the fallout from the dotcom boom has slackened, we're on to a tech refresh cycle that means capacity laid on during the boom is now no longer competitive with new facilities, and demand is increasing. I think I might be tucking some of the shares away, and I will definitely be looking for more like this one.
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