A company to keep an eye on is HMC Capital (ASX:HMC).
Stock Watch host Chris Pedersen spotlighted HMC for its strong earnings growth and attractive PE ratio on 10 October 2024. At the time HMC was trading at $8.74. Fast forward to today and it's surged to $11.74 for a remarkable profit of 34.3% in just 40 days. During the same period, the S&P/ASX200 Index was up 1.8%.
Much of the rise is likely due to HMC's plans (first announced on 24 October) to launch the Global Digital Infrastructure Platform, which will consist of the DigiCo REIT (expected to be listed later this year), as well as an institutional unlisted fund managed by HMC Capital.
The DigiCo REIT IPO is poised to become the largest Australian IPO since 2021, targeting $2.6bn in new equity. It will offer exposure to the fast-growing data centre sector, fuelled by advances in artificial intelligence (AI) and cloud technology.
Anchoring the REIT are two recent acquisitions:
- The October "seed asset" acquisition of Global Switch Australia for upfront consideration of $1.937bn (expected to be finalised in 1Q CY25). It was underwritten by a $300m placement. Global Switch Australia comprises two adjoining data centre sites in Sydney, representing the only large-scale data centre campus in the densely-connected Sydney CBD and one of the largest data centre campuses in Australia.
- The acquisition of Australian co-location data centre operator iseek for $400m, announced 11 November. (Co-location centres are shared spaces where multiple organisations can "co-locate" their IT equipment.) The iseek portfolio includes seven data centres across Queensland, South Australia, and New South Wales, with 6MW of installed IT capacity and an expansion pipeline of nearly 28MW. Iseek’s customer base spans over 500 clients, including government, enterprise, and hyperscale tenants. The transaction was structured with $150m in cash and $250m in scrip.
The platform will initially have a portfolio of 13 data centres with 586 customers across North America and Australia. The REIT aims to deliver a 4% distribution yield and development-driven growth, seeded by $4bn in assets under management.
HMC Capital is committing $500m to secure a 19% stake in the DigiCo REIT, underscoring its confidence in the platform’s potential.
