14 November 2013 – FTGlobal Switch, the owner and operator of data centres in Europe and Asia, is to pay a special dividend of up to £600m to its billionaire owners, Simon and David Reuben. The British brothers, who have amassed a fortune from property, pubs and natural resources, are in line for the windfall from the business following positive credit ratings by Standard & Poor’s and Moody’s.
Global Switch has been assigned an investment grade credit rating by S&P, with a stable outlook, which the company said underlined the strength of its balance sheet. Moody’s has also revised its guidance and provided flexibility for Global Switch to extend its borrowings without affecting its existing credit rating. In 2011, Global Switch completed its first €600m investment grade bond, which was six times subscribed.
The changes to the credit ratings have given the group room to make a payment to its holding company, which is controlled by the Reubens. The company said: “In this regard the company is contemplating an exceptional dividend of up to £600m to its parent company, subject to further borrowings and conditions in the debt capital markets.”
Global Switch has been long mooted as a potential candidate for a flotation in the UK given a solid and predictable income from the data centres it operates around the world. But those familiar with the group’s plans said that the payment of the special dividend made an IPO less likely in the near term. The Reuben brothers, who also own horse racetracks and private airports in the UK, have backed the group’s rapid expansion in Europe and Asia over the past few years. Global Switch has invested more than £1bn in expanding its network to tap into rocketing demand for data storage and processing by internet companies, with almost full occupancy in most of its centres. The rise of cloud computing has also meant greater need for storage and computer processing.
The company owns nine data centres covering more than 3m sq ft in London, Amsterdam, Frankfurt, Paris, Madrid, Sydney and Singapore, which carry a property valuation of about £3.6bn. It is also opening facilities in existing and new markets that will further increase the overall floor space to more 4m sq ft, including a site in Hong Kong. At financial year-end 31 March 2013, Global Switch reported total revenues of £340m and total assets of £4.4bn. Since 2007, the company has been wholly owned by Aldersgate Investments, the Reubens-backed investment group, which first acquired an interest in Global Switch in 2004.