Infratil buying 48% of Canberra Data Centres

Infratil [NZX: IFT] will spend $A392 million for a 48% 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 $A816 million after $A300 million of net debt and $A23 million of transaction costs are removed from the base enterprise value.

The data centre business operates three facilities with a fourth under construction and is estimated to generate annual earnings before interest, tax, depreciation and amortisation of $A50 million. The new facility is expected to generate growth of about 30% 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 says.

"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% this year.

The deal will add an extra $A10 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 are unchanged at $225 million to $255 million and $170 million to $180 million respectively, while net interest guidance increased by $5 million to $185-195 million.

Infratil's share of the transaction costs is expected to be about $A11 million, largely made up of stamp duty and due diligence costs.

Commonwealth Superannuation Corp will also hold 48% of CDC, with the remaining 4% 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.

(BusinessDesk)