Why Macquarie Group Ltd invested in new data centre company Data Exchange Network Ltd

Macquarie Group Ltd (ASX:MQG) has invested in new company Data Exchange Network Ltd (ASX:DXN).

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Macquarie Group Ltd (ASX: MQG) is one of the most respected money managers in Australia and it's also one of the biggest. I think Macquarie is a smart operator, it has identified that infrastructure and renewable energy spending is only going to increase in the coming years.

The investment bank isn't afraid of making investments in small companies. One of the newest businesses onto the ASX is Data Exchange Network Ltd (ASX: DXN).

Macquarie has taken up a 5.41% holding of Data Exchange Network, which represents 9.875 million shares.

Data Exchange Network was looking to raise at least $16 million with its listing. Some are saying it's like a smaller version of Nextdc Ltd (ASX: NXT), I suppose it's a fair comparison because they operate in the same industry.

It will generate revenue in two ways. One way is by developing and operating data centres and receiving monthly revenue from customers. The other way it will generate revenue is by building and then selling data centre modules to other operators.

It's going to use the funds to buy property and then construct two data centres in the first two years.

The company also has long-term plans to expand into Asia, it will target customers in Singapore and the Philippines.

Data demand is predicted to keep growing at an exponential rate with more of our daily life being conducted through technology one way or another. Our smartphones require data for all the applications we use, our computers need data, our places of work need data and so on.

Foolish takeaway

Obviously Data Exchange Network is a brand new ASX business and comes with a lot more risks than Nextdc because its larger peer is an already-established business. If Data Exchange Network is successful with its plans then it could become a decently-sized player in time.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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