NEXTDC’s institutional offer raises $937 million

NEXTDC’s (ASX: NXT) recent massive raise has garnered strong support from institutional investors, with proceeds of approximately $937 million secured in the first round before opening up to retail shareholders. The Brisbane-based company, founded by internet infrastructure entrepreneur Bevan Slattery, announced a fully underwritten one-for-six pro rata $1.32 billion entitlement offer to accelerate the development and fit-out of data centres in Sydney and Melbourne.

The funds raised will primarily support upgrades to the S3 facility in Artamon, Sydney, and the M2 facility in Tullamarine, Melbourne, increasing their built capacity to 50MW and 60MW respectively. NEXTDC also plans to expand the S3 Sydney data centre to 80MW, significantly surpassing the company’s initial data centre in Brisbane built in 2011.

The capital deployments, totaling almost $2.6 billion, will also facilitate the development of the S4 Sydney data centre with 300MW of IT capacity and the construction of Stage 1 of the S5 data centre in Macquarie Park. Additionally, the company aims to allocate funds for land acquisition opportunities in the Asia-Pacific region and capital expenditure in the current half-year.

NEXTDC’s CEO and managing director, Craig Scroggie, expressed delight at the strong support from institutional shareholders, highlighting the company’s position to capitalize on the growing demand for data centre services. The retail component of the entitlement offer is set to open on 18 April, with a closing date of 2 May.

The announcement coincided with NEXTDC affirming its earnings guidance for FY24, with projected revenue between $400 million and $415 million and underlying EBITDA between $190 million and $200 million. The company reported a 5% increase in underlying EBITDA to $102 million in the first half of FY24, with revenue surging 31% to $209.1 million.