Digicorito (ASX:DGT)A new data center-focused real estate investment trust has debuted on the ASX.

This was Australia’s largest initial public offering (IPO) in six years since Viva Energy. (ASX:VEA) It was listed in 2018 and is the largest real estate-related listing in over 10 years. The IPO’s capital goal was $2 billion, but due to a flood of applications, the capital increased to $2.746 billion.

However, despite the stock’s 2% rise in the first two hours of trading, DGT ended the day down 9%, closing at $4.55 (from the issue price of $5).

Supported by HMC Capital

DigiCo’s IPO will be HMC Capital’s fourth public offering in the past five years, following previous listings of Home Consortium, HomeCo Daily Needs REIT, and HealthCo Healthcare and Wellness REIT. HMC will hold 18.2% of Degico shares even after listing.

HMC Capital has appointed former Global Switch executive director Damon Reed to lead Digico REIT, along with Brian Marsh and Chris Flynn, who were brought in following HMC’s acquisition of StratCap.

HMC stock fell 7.24% on the day to close at $11.27, but is up 85.36% year-to-date.

Rating questions are important

“There were a lot of questions about the underlying assets, and the investors who participated were mainly looking for quick profits,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners.

Analysts at Bloomberg Intelligence said the company’s portfolio is worth up to 70% more than its Australian peers.

Investment research firm Morningstar values ​​the stock at $3.40, well below the $5 offering price and said the offering price valuation is “optimistic” given the competitive nature of the data center industry. Ta.

portfolio

DigiCo currently operates three data centers and aims to expand to 13 facilities across Australia and North America. A portion of the IPO funds will be used in part to complete the acquisition of Global Switch Australia, which owns two adjacent data center sites in Sydney with a combined capacity of 20 MW. This is the only large-scale data center campus located in the Sydney CBD. Upon completion of the acquisition, DigiCo’s assets are expected to generate annualized revenues of $118 million and pre-tax income of $97 million.

The REIT’s broader strategy is focused on the United States, and it already has assets in Los Angeles, Kansas City, Chicago and Dallas.

David Di Pilla, managing director at HMC Capital, described the US as a “huge” opportunity, citing the size of the artificial intelligence (AI) market as a key driver of growth. “There are fewer than 10 such listed groups in the world, but only one makes direct investments throughout the value chain.”

McKinsey & Co predicts that global demand for data center infrastructure will grow 19-22% annually from 2023 to 2030.

The sector has seen a flurry of big deals this year, including Blackstone and the Canada Pension Plan Investment Board’s $24 billion acquisition of AirTrunk and AustralianSuper’s $1 billion investment in the space.