Focusing on data centres with Kao Data

Have you sent an email, used a generative AI tool or saved a document to the cloud today? If so, you've interacted with a data centre. They're critical to our modern economy, yet sometimes misunderstood.

We recently sat down with Spencer Lamb, CEO of data centre provider Kao Data, and Matteo Colombo, Managing Director of Digital Infrastructure at L&G, to shed some light on these assets.

L&G and Kao Data have worked together for several years. How would you describe the partnership and what are the key milestones so far?

Spencer Lamb (SL): Put simply, the relationship with L&G has been absolutely critical to our progress since 2020. We were a one-data-centre business, and today we're a multi-site platform across the UK. Without L&G's support we wouldn't have achieved that step change, evolution and growth.

Matteo Colombo (MC): Kao's been a phenomenal platform for us to grow in the sector. We've got a very dynamic, exciting company that's still in the infancy of its growth in a scalable position based on what we've built together.

SL: The organisation now has a really strong foundation to harness the significant opportunity that we see within the data centre industry. And, importantly, we want to do it in the right way. Managing our supply chain and our partners effectively and correctly is important to our success.

We see a material opportunity in the UK. Data centre companies like us can see significant growth in the UK by placing data centres in the right locations and embracing the general public on that journey as well.

What's made the partnership successful thus far?

SL: The history and the trust that's been built over the past few years is part of the foundations of the business. That's something that doesn't always exist in companies.

MC: We started with one customer. Others then followed. We have helped open the door for Kao, but the team then stepped through the door and delivered. That's the nature of the partnership that we're talking about.

You've had a lot of customers within financial services – including us – and those customers can be some of the most difficult. So, if you can serve them, you've proven you can serve others.

SL: We are UK-focused, and as data centres become more critical to the country's economic future, L&G is well positioned to help us get access to people within the public sector that can help us get things done more effectively.

What's becoming clear now is the need for things like sovereign artificial intelligence. We're very well positioned to be able to provide that. In recent months we've been able to have conversations about what data centres are, why they're important, and what the country will miss if it doesn't have policies in place to support them in the future. Having L&G beside us in that endeavour is incredibly valuable.

Data centres are getting a lot of attention. Why is it important to shine a light on this sort of infrastructure?

SL: Publicly there's perhaps some scepticism of AI. Data centres in a way are the only tangible representation of AI. Perhaps we're bearing the brunt of people's concerns?

In fact, these facilities are going to be contributing to future benefits to the economy and growth. Without them, the UK economy will not grow. So, there's work that the industry as a whole needs to do to change the narrative.

MC: The UK's data centre market remains Europe's leading market. For the UK to remain leading, it's important that stakeholders better understand data centres. They are really part of everyday life.

SL: Another consideration is energy. Today, we have many renewable energy projects in more remote parts of the UK. They're providing an increasingly large percentage of our energy, but they are remote so they can't always get the energy to the populations that need to consume it. Data centres can consume some of those green electrons if they're located nearer those projects.

What's driving demand for data centres, and what might be required in order to meet it?

SL: With 10 GW of data centre demand over the next five to 10 years, we can put 20 500 MW data centres across the country. That will require £150 billion worth of construction and investment.

To get to 10 GW of capacity, the amount of construction is material. You need a huge amount of people to support you in that endeavour. Architects, mechanical consultants, structural engineers, electrical engineers. An army of lawyers. You could argue that we won't see AI take jobs – we'll see AI create jobs in industries that have been around for decades.

Furthermore, in placed like Slough, which is the largest data centre market outside America, the 32 or so buildings that form its data centres require 14,000 people to keep them running. If you think about it, you can provide 14,000 jobs that support data centres in 20 locations across the country. And those jobs are highly skilled and on a long-term basis. It's a really powerful, strong story.

In part two, we'll cover data centres from an investor's standpoint, while also assessing what the future might hold for these assets.

Assumptions, opinions, and estimates are provided for illustrative purposes only. There is no guarantee that any forecast will come to pass.