Australia’s Goodman Group and Digital Realty have moved to build a stake in Australian data centre operator NextDC, seeking to acquire up to 9.9 per cent of the company as power constraints and development challenges reshape the sector. The two companies used a jointly owned investment vehicle, Ackland Investments No.1 Trust, to run an after-market book build on 4 November, offering AU$9.50 per share for up to 9.9 per cent of NextDC.
The final size of the holding was not confirmed at the time of NextDC’s response to the transaction on 5 November. The company said it did not know the outcome of the share raid.
Goodman and Digital Realty told investors they had no intention of making a takeover bid or submitting a control proposal at this time, although they reserved the right to do so in the future.
NextDC described the move as opportunistic, noting it came two weeks after the company announced delays to electricity network works supplying its M3 Melbourne campus and a substantial downgrade to its FY27 financial guidance.
The M3 delay highlights the growing importance of power availability and infrastructure delivery to the Australian data centre market. NextDC said the suspension of parts of Jemena’s 66kV network augmentation works had pushed the next increase in power supply to M3 into FY28, deferring the delivery and billing of contracted capacity.
The company cut its FY27 net revenue guidance to AU$475 million-AU$500 million, from AU$615 million-AU$640 million, and underlying EBITDA guidance to AU$245 million-AU$265 million, from AU$385 million-AU$410 million. The revised figures exclude the affected M3 contracts, which accounted for about AU$140 million of both net revenue and underlying EBITDA in the August guidance.
NextDC has also paused development projects and land acquisitions not backed by customer contracts while it reviews its capital expenditure programme.
Constraints limiting supply
Goodman’s latest operational update provides a broader indication of the challenges facing data centre developers. Chief executive Greg Goodman (above) said demand for data centres continued to grow, but constraints around power, land, planning and infrastructure delivery were limiting supply.
Goodman reported a global power bank of 6.6GW, including 3.6GW of secured power. Data centres accounted for 79 percent of its AU$19.7 billion development work in progress at the end of September. The group said its data centre development programme remained on track for forecast delivery dates.
The move into NextDC is significant given the two are major data centre players. Goodman is a large property developer with a growing global data centre portfolio, while Digital Realty is one of the world’s largest data centre operators. For its part, NextDC operates 18 data centres across Australia and Asia.
The rationale for the joint investment has not been publicly explained as yet, and neither company has announced plans to combine operations or pursue a development partnership with NextDC.
For now, NextDC said its board was not in possession of a takeover proposal and that shareholders did not need to take any action in response to the announcement.