NextDC plots $1.3B capital raise

ASX-listed NextDC is undertaking a $1.3 billion capital raising effort as it significantly ramps up the development and fit-out work across its Sydney and Melbourne data centres. 

The data centre operator is experiencing strong demand for its services. For the 12 months to December 2023, contracted utilisations increased 64.8MW to 149MW. 

It also has a record forward order book of 68.8MW which it said will convert to billings from FY25 to FY29, driving future revenue and earnings. 

“NextDC continues to see significant growth in demand for its data centre services underpinned by powerful structural tailwinds,” NextDC CEO and managing director Craig Scroggie said. 

“Amid this backdrop, we have decided to bring forward the development and fitout of key assets in Sydney and Melbourne to ensure we are able to meet this growth in demand, continue to support our customers and ensure the company is well positioned to take advantage of the diverse range of opportunities expected to present over the medium term.”

In a presentation to shareholders, NextDC highlighted artificial intelligence as the “mega” trend for the data centre industry, coupled with the growth in global data volume and migration to cloud, which has continued to drive the market in the past decade.  

Specifically, the combined funds and liquidity will go towards:

• $400 million to accelerate the built capacity of S3 to 50MW,
• $350 million to fast-tracking the development of S4 deploying critical HV infrastructure and fitting out the initial 10MW of built capacity,
• $300 million will be put into fast-tracking the development of S5 stage 1 building works,
• $300 million towards the built capacity of M2 to 60MW and additional HV infrastructure,
• $500 million pumped into identifying land opportunities in Asia Pacific,
• $643 million will be allocated to 2H24 capital expenditure and $25 million will go towards transaction costs and
• $862 million will be allocated to support NextDC’s broader development pipeline and working capital liquidity support.

Following the completed capital raise, NextDC will have a tangible asset backing of $5.1 billion and pro-forma liquidity of $3.4 billion.