Data center landlord DigiCo REIT slumps in debut after marking Australia’s biggest IPO in six years
- Shares end at A$4.55 each, 9% below offer price
- IPO raised A$2 bln, biggest in Australia since 2018
- HMC Capital largest shareholder with 18% stake
Dec 13 (Reuters) – Shares in DigiCo Infrastructure REIT (DGT.AX), an Australian data centre landlord and operator, tumbled on its maiden day of trade on Friday – a reflection of concerns that some valuations in the red-hot data centre sector have gotten too rich.
DigiCo, whose IPO raised A$2 billion ($1.3 billion), finished at A$4.550, 9% lower than its A$5.00 offer price.
The listing of the HMC Capital (HMC.AX), firm underscores growing investor appetite for data centres in the Asia-Pacific region driven by the demand for artificial intelligence-based services.
But Morningstar last month gave DigiCo a high uncertainty rating with a fair value estimate of A$3.40 per share. Its IPO price assumes high rates of return, said analyst Roy van Keulen, adding that this was unlikely, or unlikely to persist given the competitive nature of the industry.
DigiCo manages an A$4 billion portfolio of data centres across the U.S. and Australia. It has said it will use part of the IPO proceeds to buy two large-scale adjoining data centre sites near Sydney with a contracted capacity of 20 megawatts.
HMC Capital, an asset manager founded by banker-turned-investor David Di Pilla, retains an 18.2% stake in DigiCo.
The sector has seen much activity in Australia this year. A Blackstone-led consortium (BX.N), bought data centre firm AirTrunk in a deal with an implied enterprise value of A$24 billion, while NextDC (NXT.AX), launched a capital raising via equity of A$750 million and has sought to raise A$2.9 billion via debt.
Pension giant AustralianSuper has also made two investments worth A$4.7 billion in the sector since last year.
Howard Penny, co-head of real estate research at Citi, was optimistic about the sector’s prospects, saying there was an
Attractive structural growth opportunity for investment into data centres in Australia and globally driven by the rise of artificial intelligence, autonomous vehicles, and higher demand for information storage.
($1 = 1.5733 Australian dollars)
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Data center landlord DigiCo REIT slumps in debut after marking Australia’s biggest IPO in six years, source
