Infratil’s $1 billion share placement filled after strong demand

CDC's 14 megawatt Hobsonville 1 data centre in northwest Auckland. Photo / Chris Keall

Infratil says it has successfully raised $1 billion from a share placement aimed at bolstering its investment in data centres.

The placement - the first leg of its $1.15b total capital raise - attracted demand “well in excess” of the placement’s size, the company said.

New shares were issued at $10.15 per share - a discount of 6.8 per cent to the last closing price on the NZX of $10.89 on Friday, and a 6.0 per cent discount to the five-day volume-weighted average price of $10.79.

Infratil went into a trading halt during the placement. When business resumed, the stock traded at $10.65.

The offer was not completely unexpected after Infratil’s last result announcement left investors wondering how the company was going to finance the next phase of its investment in data centres.

“The placement attracted significant interest from both existing shareholders and new investors in New Zealand, Australia and offshore, with total demand well in excess of the placement size,” chief executive Jason Boyes said.

“We are very pleased with the strong level of support for the placement, particularly from our existing shareholders,” Boyes said.

The offer also attracted several “high-quality” institutional investors to the register.

The $150 million retail side of the offer - which is not underwritten - opens on Thursday.

“The capital raised will create significant capacity to fund growth investments at our transtasman data centre platform, CDC, and across the broader Infratil portfolio,” Boyes said.

The infrastructure investor has interests in the digital infrastructure, renewable energy, healthcare and airport sectors.

The capital raise will be one of the biggest in the New Zealand market in recent years.

Analysts said the capital raise would be a pleasant change from recent trends; a company raising funds for growth rather than shoring repairing stretched balance sheets.

“Infratil’s capital raise highlights the difference between companies raising capital to support growth when there is investor appetite for positive corporate expansion and companies being forced into emergency capital raising to offset financial challenges,” Harbour Asset Management portfolio manager Shane Solly said.

“Infratil has refuelled for growth - and may continue to - rather than having to raise equity for a blown financial fuse after being run too hard.”

The company said demand for data centres was accelerating on the back of cloud adoption and significant investments in generative artificial intelligence.

Data centres chew through vast amounts of electricity and are measured by how much power they use.

The rapid increase in demand has led CDC into advanced negotiations with customers for over 400 megawatts (MW) of capacity across multiple sites, which is expected to accelerate CDC’s capital expenditure and funding needs.

CDC’s development pipeline continues to expand with the inclusion of the Marsden Park development in Sydney - a 720MW campus, more than double CDC’s current operating capacity - bringing CDC’s total planned capacity to 1870MW.

Australia’s Future Fund and Commonwealth Superannuation Fund, which own 25 per cent each of CDC, will be putting up similar amounts of cash for CDC’s expansion.

Infratil has the ability to accept over-subscriptions in the retail offer, which is not underwritten.

CDC has been one of Infratil’s most successful investments, with its stake independently valued at $4.42b, about 10 times what was first invested in 2016.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.