Why the Nexion (ASX:NNG) share price is racing 8% higher

The Nexion Group (ASX: NNG) share price is racing higher following a multi-million deal signed with a leading tech giant. Here's the details.

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The Nexion Group (ASX: NNG) share price is racing higher following a multi-million deal signed with IBM Australia Ltd (NYSE: IBM).

During the late afternoon trade, the information technology service provider's shares are up 8.3% to 33 cents. It's worth noting that when the market opened, the Nexion share price hit an all-time high of 41 cents.

What's the deal?

According to its release, Nexion advised it has secured a contract with IBM Australia for a term of 5-years.

Under the agreement, Nexion will deploy a number of its products to IBM for a project located in Western Australia. This will include Nexion OneCloud infrastructure-as-a-service (IaaS), network links, session initiation protocol (SIP) voice services, security, and desktop support as well as managed services.

The deal is expected to generate revenue of around $4 million for Nexion. This follows a previous significant IBM solutions contract in the Nexion W1 Data Centre signed in the last 12 months.

Words from the Nexion CEO

Nexion CEO Kevin Read welcomed the deal, saying:

We are excited to be working with IBM, a recognised global technology leader. This deal helps underpin our global growth strategy based on key partnerships and to have a company of IBM's caliber select Nexion is a phenomenal outcome.

Hybrid Cloud is one of the fastest-growing cloud segments and NEXION is proud to be an emerging global cloud, security, networking and data centre player.

Growth strategy in progress

Management noted that the newly signed contract, along with the go-live of its Perth Aryaka points of presence (PoP), was a major milestone for the company.

Nexion plans to expand its presence through deploying OneCloud Nodes across strategic locations. So far, existing OneCloud nodes are in Perth, Melbourne, and Adelaide. Others are expected to come to other Australian capital cities.

Furthermore, Nexion will look to penetrate the New Zealand market and abroad.

About the Nexion share price

Since listing on the ASX boards in the middle of this month, the Nexion share price has doubled in value.

The company offered up to 40 million shares with a price of 20 cents apiece to raise $8 million.

Based on the current share price, Nexion has a market capitalisation of around $21.3 million.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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