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Former Microsoft Israel head in Netanya server farm project

Former Microsoft Israel head in Netanya server farm project

Shelly Landsmann has teamed with the Levinstein Group and UK firm Goldacre to build a server farm on the 13,500 square meter.

https://en.globes.co.il/en/article-former-microsoft-israel-head-in-netanya-server-farm-project-1001483092

Former Microsoft Israel country manager Shelly Landsmann, together with the Levinstein Group and British investment firm Goldacre, is constructing a server farm in Netanya at an investment of NIS 1.1 billion, “Globes” has learned. The server farm will extend over 13,500 square meters, and is designed to connect to undersea cables that will land in Netanya. With the delay in laying the cable by Cinturion because of the continuing war, determined efforts are being made to find an undersea cable that will reach the area.

The server farm is believed to be intended for the global giant cloud computing companies such as Google, Amazon, Microsoft and Nvidia, which already take up the capacity of all the new server farms built in Israel.

The Israeli-British partnership, NED, controlled by Goldacre, began operating in 2022, but last month it was reported to have made several appointments and taken steps to expedite construction. Landsmann joined as a co-founder of the project alongside Daniel Efrati, formerly an investment banker with Israel Discount Bank of New York, and David Bloom, a partner in British investment company Noé Group, of which Goldacre is the technological arm.

Regulation and heavy costs

The new server farm represents unexpected competition for the veteran companies in the field, such as Shonfeld Engineering, Serverfarm, and MedOne, and real estate companies that have entered it, such as Kardan Israel and Geva Real Estate. The server farm construction and maintenance sector in Israel is difficult because of heavy regulation, the high cost of power and computing, and shortcomings in the power infrastructure. It is not surprising that companies have exited the sector, such as Azrieli Group, or have decided against entering it after considering doing so, such as Melisron.

Among other senior figures from Israel and abroad who have joined NED are Dani Simis, who will be CTO, and who was responsible for managing the sever farms of Bezeq International and the deployment of its undersea fiber-optic cable that connects Israel to Italy, and Gerard Thibault, formerly CTO of data centers company Kao Data (of which David Bloom is the founder and chairperson and in which Goldacre is invested), who will be an advisor to the project.

NED and Levinstein have bought a 13,500 square meter site in the Si’im Park, part of the Poleg Industrial Zone in Netanya, for NIS 90 million in equal shares, and they are sharing planning and construction costs equally. They have each invested tens of millions of shekels in obtaining permits and initial work on the site, which formerly housed telecommunications company Cellcom. The aim is to connect between the undersea cables due to land in Israel and technology industry centers in Netanya, Herzliya Pituah and Tel Aviv.

In the initial stage of development, a small, 16 megawatt server farm will be built, covering a total of 50,000 square meters on several floors. The server farm will be expandable in accordance with the number of customers. The project includes the possible construction of a 35,000 square meter scientific research campus.

The server farm will mostly be built underground, with cooling systems to reduce power consumption. Goldacre is owned by David Bloom and Leon Noé, who was one of the founders of British Israel, which was sold to Melisron. Through Kao Data, they have built several server farms, with total capacity of 40 megawatts, in London and Manchester, one of which has hosted Nvidia since 2018.

Separately, another new server farm is being built in the Kfar Sava industrial zone by Serverz, owned by Kardan Israel, Geva Real Estate, and Rani Zim. The server farm will comprise 12,500 square meters underground and 4,000 square meters above ground, with a total capacity of 10 megawatts. It will probably be launched at the end of this year, with an initial capacity of just 2 megawatts, at an investment of NIS 80 million. The construction cost of the server arm will be NIS 350 million. HPE has been selected to operate the server farm and recruit customers, to which it will offer its cloud technology.

Conversations with Daniel Efrati
Episode 1 – ‘The Digital Spice Route’

In this inaugural episode David is joined by Daniel Efrati, CEO of NED data centres, Goldacre’s partner in Israel & the Middle East. They discuss investment into the Israeli market and the value we see in the ever-changing environment. We discuss what drew Daniel to data centres as a career and he gives us valuable insight into why he chose Israel as the key location for the start of the Middle Eastern platform.

Next frontier for telecoms ‘is the Middle East’

The Middle East’s market is changing, with strong growth and better relations between Israel and its neighbours, Goldacre’s David Bloom tells Alan Burkitt-Gray.

Goldacre, a major shareholder in UK-based Kao Data, is to build a new 16MW data centre in Netanya, north of Tel Aviv. This Israeli investment – a partnership between Goldacre’s NED platform and the Meshulam Levinstein Group, an Israeli engineering, construction and real estate company – plans to develop a 13,500 square metre site at a cost of £135 million (US$162 million).

London-based David Bloom, founder of Goldacre, says: “This is huge moment for both Goldacre and NED, having signed the deal on this site, which is set to transform the Israeli data centre industry further and ensure we are a key part of this rapidly growing industry.”

But there’s more, he tells me: “The Middle East is one of the next markets and the next frontier. It is the right place to be.”

That means more than just that Tel Aviv data centre. Things that were politically impossible a few years ago are now being planned and mapped out, as Israel is in the middle of a rapidly growing market, the Middle East.

The region is also midway between Asia and Europe, routes that are served almost exclusively via Egypt today, after the Russian connection was closed following Vladimir Putin ordering Ukraine’s invasion in February 2022.

A few years ago, no one would have considered a link through Israel would be viable. But, as Capacity reported in 2022, there will soon be a cable running from India to Jordan, crossing Israel overland to reach the Mediterranean Sea.

“The Blue-Raman cable is changing everything,” Bloom says. “It makes the area a connectivity hub. Logic dictates it was going to be that way, but you couldn’t predict when.”

Goldacre’s “ambition is to be a multi-site operator in the region”. Which means Tel Aviv is just the start. The company has begun work on the Tel Aviv site but Bloom says it is “simultaneously looking for different sites. Two sites in that geography”.

From what he says, “geography” does not just mean Israel, but its neighbouring countries. “We’re looking at what the end customer wants,” says Bloom.

“You’ve got to pick your country,” he adds. He tells me he “likes” Jordan and the United Arab Emirates, but adds: “Am I going to be building a data centre in Iran any day now? No!”

I did not ask him about Iran, but it is clear the Bloom and his colleagues are considering starting projects in several Arabic-speaking neighbours or near-neighbours of Israel.


The long game

“We’d never limit ourselves, but the route is clear. In two to three years, we’ll be active in Israel and one other geography,” says Bloom. “Though there might be more opportune things that come up, that we didn’t plan to do. It is a long game, and we can’t do everything.”

Goldacre’s founder does mention Iran again, though. I point out that during 2022, Iran has seen more pro-democratic activity than at any time since 1979, when the Iranian Revolution led to the overthrow of the Shah, Mohammad Reza Pahlavi.

“It’s possible that in three or four years you could see a democratic state,” he says of Iran. “I’m not a political commentator. The billion-dollar question is when and for how long.”

That is a matter for the long term, though. Bloom says his company’s focus is on Israel “in the near- to medium-term” but “with options in neighbouring markets”.

“Digital infrastructure is a long-term game,” he adds.

The Netanya site will observe green building standards. According to Goldacre, there are plans to develop a high-tech 35,000 square metre science and research development campus alongside it.

Goldacre believes Israel is one of the significant technological hubs in the Middle East, with its data centre market measuring $337 million in 2021, and investment is expected to reach $629 million by 2027.

Within Israel, Goldacre says it will use the expertise it has gained through its successful UK data centre platform, Kao Data. This facility was named after Charles K Kao, the Chinese-British physicist and engineer who won the 2009 Nobel Prize in Physics for his pioneering work in optical fibre communications.

George Hockham, who worked with Kao on their 1965 paper theorising fibre optic communications, did not share Kao’s prize. Kao and Hockham, who died in 2013, did their work at Standard Telecommunication Laboratories (STL), which was owned by US equipment company ITT via its UK offshoot, STC. This lab was in Harlow, north of London, in a site now occupied by Kao Data.

Bloom says that Goldacre wanted to pay tribute to Kao when it picked the Harlow campus for the site of its first UK data centre, so Kao’s wife, Gwen May-Wan Kao, also an engineer, was invited to “visit the site when we first broke ground”.


The Kao model

Goldacre’s developments in the Middle East will be modelled on the Kao Data facility in Harlow, says Bloom.

“Back in 2012, when we wanted to build a campus-style data centre, the dynamic was still towards on-premise computing,” he says. The potential for data centres was limited then by the lack of connectivity, he recalls. “But it seemed to be destined for change.”

Kao Data was built to meet an ambitious target of 40MW capacity. At the time it was “ the largest data centre development in London”, Bloom says. “Kao Data was born out of that.”

Bloom says Goldacre has now become “a multi-faceted investor” in digital infrastructure, which has “a lot more to go”, as at the moment the company is “just scratching the surface”. Kao Data now operates three campuses in a ring around central London, in Harlow, Northolt and Slough.

This has taken the investor from the London area to the Middle East. “We’re attracting huge capital, different capital. Now people are starting to ask about data sovereignty, the use of power and ESG [environmental, social and governance] issues,” says Bloom.

The pandemic brought an “overnight change in interest”, he notes.

“It was clear to see the potential for innovation in Netanya,” says Bloom, “and we are pleased to work with our latest data centre platform NED and leading Israeli company Levinstein, to bring our knowledge, gained through our work at Kao Data, to further develop the sector.”


The next frontier

With NED, “the proposition is that the Middle East is one of the next markets, the next frontier”, says Bloom, noting that the sort of connections he has been talking about “are the major trade routes”, which reflect the old spice routes that once ran between Asia to Europe. Now, they will mirror the data routes to European cities such as Amsterdam, Frankfurt, London and Paris – “the old banking hubs”, he muses.

“None of this is surprising,” says Bloom. “It’s a matter of picking your partners and picking your location.” And timing. Three years ago was too early, he says. “The right time is now, with the market dynamics and the political outlook in the region and the emergence of the Gulf states.”

But he has something else to add: the human element.

“I want to emphasise the value of our people,” Bloom tells me. “There’s a big focus on capex, this or that amount in billion, but I have found that some of the best investments are in people, in Kao and in NED. And the biggest threat facing the industry is that no one is addressing the skill shortage. We’re not producing enough top-notch teams. This is almost a silent killer. It holds back innovation, and cultivating talent takes years.”

Bloom is “a great believer in building local teams”, because “there are local nuances when you are building physical infrastructure”

Teams have to know the local position, but “you have planning risk, customer risk” still.

However, Bloom is still excited about what is to come. “This is the beginning. It’s an exciting time.”

Why we invested: Israel’s burgeoning data centre boom

As an investor, there is nothing quite like entering a promising new market that already feels like home. That is how it felt when Goldacre recently announced its Middle Eastern NED data centre platform and a partnership with The Levinstein Group, including a new £145 million data centre to be built in Netanya, Israel.

Israel is far from a frontier investment destination. Its tech ecosystem is world renowned, as are its diverse young talent pool and equally vibrant social scene brought about by bright (younger than I am) people moving there to pursue careers in exciting new disciplines.

I will leave Israel’s famous party scene to reels on certain image-led news and networking platforms for now, but people and places are more interconnected to our strategy than you might first think.

All these tech start-ups, quantum computers and after-hours partygoing dev brains need data – enormous amounts of data.

Ironically for such a rapid digital growth economy, Israel’s data connectivity and storage has catching up to do as demand continues to soar. That is where we see an opportunity to act.

Israel is one of the most significant technological hubs in the Middle East. Its data centre market measured USD 337 million in 2021 and investment is expected to reach USD 628.8 million by 2027.

There are already huge data centre sector developments underway in the country. Plans for its first hyperscale site were announced a year ago. An ambitious first-ever cable connecting Israel and Saudi Arabia, announced earlier this year, could boost data speed and reliability for countless people and businesses. We now read about US mega corporations – propelled by the Nimbus government cloud tender last year – doubling down on colocation commitments with regularity.

So, what makes Goldacre’s entrance different?

  • People – The Noé Group has been investing into Israel for years and has first rate people on-the-ground. The Levinstein Group is an ideal local partner too, having successfully dealt in Israeli commerce and real estate for 75 years.
  • Knowledge – Goldacre is a proven ground-up developer and investor. We have taken the customer driven approach long established in the UK market with Kao Data and applied it to the opportunity. We know what international customers want and we deliver.
  • Risk – After all, well-trodden paths won’t yield new outcomes.
  • And of course, timing – With data centre demand soaring and political and business ties aligning, this is the right time for us to take experts, deep knowledge and calculated risk to seize the opportunity.

Announcing our first site in Israel is a great way to end 2022 and more importantly an exciting prospect for 2023.

First phase development is on track to begin in summer 2023 during which we will construct a fully secured 16MW stand-alone facility across 50,000 square metres while retaining capacity for growth should we wish to expand in future. It will host hyperscale and large wholesale clients with two electricity feeds achieving top levels of power usage effectiveness.

Supporting Israel’s rapid digital transformation is an exciting journey we are eager to take and – unlike the very notion of me appearing alongside #NetanyaNightlife on TikTok – we have the deep knowledge, people, risk appetite and ideal timing to make it happen.

Kao Data-investor Goldacre signs JV with Levinstein to build Israeli data center, launch Middle Eastern business

Goldacre has entered into a joint venture with The Levinstein Group to launch a data center business for the Middle East data center market.

The two companies have secured land in the northern Tel Aviv metro area within the city of Netanya, Israel, for the first data center.

It will be operated by NED Data Centers, which is owned by Goldacre’s parent company, the Noé Group.

Goldacre (formerly Goldacre Ventures) is the venture capital arm of Noé, a £2.5bn ($3.04bn) family office-led investment house based out of London. The company owns a roughly 30 percent stake in UK data center firm Kao Data.

The Levinstein Group is an Israeli engineering, construction, and real estate company, that has traditionally dealt with commerce and office real estate, but is now expanding into data centers.

The first phase of the development, expected to begin in summer 2023, will include a 16MW, 13,500 square meter (145,000 sq ft) data center. Goldacre said that it would be built with expansion in mind.

It is targeted at hyperscale and large wholesale clients, and has redundant power feeds.

A high-tech 35,000 sqm (377,000 sq ft) science and research development campus may be built alongside the data center.

“This is a huge moment for both Goldacre and NED, having signed the deal on this site which is set to transform the Israeli data center industry further and ensure we are a key part of this rapidly growing industry,” David Bloom, founder of Goldacre, said. “It was clear to see the potential for innovation in Netanya, and we are pleased to work with our latest data center platform NED and leading Israeli company, Levinstein, to bring our knowledge, gained through our work at Kao data, to further develop the sector.”

Daniel Efrati, CEO of NED Data Centres, added: “We are delighted to announce the signing of the first deal for the NED platform, set to bring a new data center and with-it new jobs and investment to the already booming tech industry in Israel.