HMC Capital Limited (ASX: HMC) today [11th November 2024] announced that it has entered into agreements to acquire shares in iseek, a leading Australian co-location data centre operating platform, for $400m.
The iseek acquisition is consistent with HMC’s recently announced strategy to establish a Global Digital Infrastructure Platform (DigiCo). HMC has now secured $2.5bn of strategic operating assets in Australia and is also in exclusive due-diligence on an additional $1.6bn of data centre assets located in North America. These acquisitions will seed an ASX-listed DigiCo Infrastructure REIT (DigiCo REIT) with $4bn+ of AUM.
The key highlights of the acquisition of iseek are as follows:
- An acquisition price of $400m which represents 19x CY25 forecast EBITDA
- Acquisition consideration of $150m upfront cash and $250m of scrip in the DigiCo REIT IPO. Major shareholders & founders have agreed to escrow the majority of this until the release of the FY25 and FY26 results
- iseek operates a scalable co-location data centre platform with 6MW of Installed IT Capacity across 7 operating facilities located across QLD, SA and NSW and a 27.6MW development pipeline of Future Expansion IT Capacity
- It is exposed to high growth secondary markets with attractive competitive and pricing dynamics
- High quality and diversified customer base spanning 500+ customers across government, enterprise and hyperscale tenants.
In terms of the ASX-listed global DigiCo Infrastructure REIT:
- HMC Capital’s previously proposed strategy to establish the ASX-listed DigiCo REIT by calendar
year end remains on-track, with the intention to raise ~$2.6bn of new equity which will be seeded
with $4bn+ of AUM at an implied FY25 EV/EBITDA multiple of 26.1x - DigiCo REIT will be a diversified owner, operator and developer of data centres, with a global
portfolio targeting stabilised, value-add and development opportunities - DigiCo REIT will target strong total returns driven by a target distribution yield of 4% plus growth
from contracted revenue growth, lease-up & value-add opportunities and developments - A Current Installed IT Capacity of 76MW with a significant embedded growth pipeline comprising >161MW of Planned IT Capacity across Australia & North America, with target development returns of 10%+ yield on cost
- Best in class global management team assembled across Australia and North America with an average >20 years’ experience and extensive operational and development track record
- DigiCo REIT fees payable to HMC expected to be broadly consistent with the fee constructs of HDN & HCW. HMC Capital will invest a minimum of $500m (~19%) in DigiCo REIT
- Following the recent successful $300m equity raising & $150m upsize in HMC’s corporate credit facility, HMC has sufficient asset level financing and balance sheet liquidity to underwrite the acquisition of the proposed DigiCo seed assets. In the event that the DigiCo REIT IPO is delayed, HMC has the ability to defer settlement of the iseek acquisition until 31 March 2025 and to not proceed or defer settlement of the US acquisitions.
For further detail of the acquisition as well as the bases of some of the figures quoted please refer to source: https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02878920-2A1561210
