Infratil will spend A$392 million (NZ$420 million) for a 48 percent stake in Canberra Data Centres, teaming up with Australian government pension fund provider Commonwealth Superannuation Corp to buy the data centre business.
The announcement comes a day after the Wellington-based investor announced its annual results and said it expected to unveil new investments in the near future.
The deal values CDC's equity at A$816 million after A$300 million of net debt and A$23 million of transaction costs are removed from the base enterprise value.
The data centre business is headquartered in Canberra, Australia, operating three facilities with a fourth under construction, and is estimated to generate annual earnings before interest, tax, depreciation and amortisation of A$50 million.
The new facility is expected to generate growth of about 30 percent in the 2017 financial year.
"The acquisition of CDC provides Infratil with a meaningful exposure to the emerging data and related telecommunications infrastructure sector, which we have been following for some time," Infratil chief executive Marko Bogoievski said in a statement.
"CDC is well positioned to take advantage of industry tailwinds including continued growth in outsourcing, data storage, and processing."
Infratil has been looking to deploy $1 billion of capital after selling its Z Energy, Lumo and iSite holdings in the 2016 financial year, and intends to focus on renewable energy, the retirement sector, social infrastructures such as housing, telecommunications infrastructure, and waste management.
The company's shares last traded $3.375 and have gained 3.1 percent this year.
Today's deal will add an extra A$10 million to Infratil's annual earnings, and the investment firm raised its 2017 guidance for underlying earnings before interest, tax, depreciation, amortisation and fair value movements to between $485 million and $525 million.
Its operating cash flow and depreciation and amortisation outlooks were unchanged at $225 million to $255 million and $170 million to $180 million respectively, while net interest guidance increased by $5 million to $185 million to $195 million.
Infratil's share of the transaction costs is expected to be about A$11 million, largely made up of stamp duty and due diligence costs.
Commonwealth Superannuation Corp will also hold 48 percent of CDC, with the remaining 4 percent held by the data centre company's executive. HRL Morrison & Co, Infratil's manager, will manage the investment on behalf of the major shareholders.
The deal is subject to Foreign Investment Review Board approval and is expected to be completed in July this year.
CDC was set up in 2007, providing data centre services to Australian federal and state government agencies, and attracted investment from Quadrant Private Equity in 2014. Quadrant and the founding shareholders were the sellers in the deal.
An earlier version of this story incorrectly used US dollars, rather than the correct figure of $392m Australian dollars. - The NZ dollar cost of the data centre stake has been changed accordingly.