Australia’s HMC Capital Buying Local Data Centre Operator Iseek for $263M

HMC Capital has agreed to buy Australian data centre platform Iseek for A$400 million ($263 million) in a cash-and-stock deal, following closely on the fund manager’s purchase of digital infrastructure giant Global Switch’s Down Under business.

Sydney-based HMC will pay A$150 million in cash for Iseek’s 6.1-megawatt portfolio of seven operating facilities and 27.6MW project pipeline, the ASX-listed firm said Monday in a filing with the Australian Securities Exchange. The remaining A$250 million is to be satisfied by shares in HMC’s forthcoming DigiCo Infrastructure REIT, with the total consideration translating to more than A$11.8 million ($7.8 million) per MW of committed capacity.

The planned REIT’s 13-asset seed portfolio will consist of the seven active Iseek facilities across Brisbane, Sydney, Adelaide and Townsville in northern Queensland; an under-development project in Brisbane and two in southern California; along with three future acquisitions under exclusive due diligence in North America, according to HMC.

The trust is expected to launch within this year with installed and future IT capacity totalling 238MW and assets valued at A$4 billion.

“Iseek is a leading co-location data centre platform with a high-quality and diverse customer base across government, hyperscale and enterprise customers,” said HMC managing director and CEO David Di Pilla. “This acquisition is also highly complementary to our recent acquisition of Global Switch Australia with a number of benefits including enhanced geographic and customer diversification.”

High-Growth Markets

HMC aims to invest a minimum of A$500 million into DigiCo REIT for a 19 percent share of the trust. After a A$300 million equity raising and A$150 million upsize in HMC’s corporate credit facility, the firm has sufficient financing and liquidity to underwrite acquisition of the seed assets, it said.

If DigiCo REIT’s IPO is delayed, HMC can opt to defer settlement of the Iseek acquisition until 31 March 2025 and either proceed or defer settlement of the US acquisitions.

The REIT stands to benefit from Iseek’s position in the high-growth secondary markets of Brisbane and Adelaide, where significant hyperscale edge deployments are anticipated in the medium term, according to HMC. The seven operating facilities have more than 500 customers and a weighted average contract term of 47 months, with total planned capacity of 33.7MW.

“We are excited to be partnering with HMC Capital’s DigiCo platform to accelerate Iseek’s next phase of growth,” said Iseek CEO Scott Hicks and founder and executive director Jason Gomersall. “A significant portion of the acquisition proceeds will be taken in scrip in the DigiCo Infrastructure REIT IPO which is a testament to our strong conviction in the REIT’s investment strategy and growth runway.”

Building the Next AirTrunk

HMC in October agreed to pay A$1.94 billion for the Australian arm of Global Switch, the data centre group controlled by Chinese companies Jiangsu Shagang Group and AVIC Trust. Global Switch Australia owns a two-building hyperscale campus in Sydney’s inner-city Ultimo suburb.

HMC plans to establish a global digital infrastructure platform comprising ASX-listed DigiCo REIT and an institutional unlisted fund, The Australian reported.

With September’s record $16.1 billion acquisition of Asia Pacific platform AirTrunk by Blackstone and the Canada Pension Plan Investment Board ranking as the biggest data centre deal to date, global investors are jockeying to get on top of an AI-driven growth wave in the industry.

The AirTrunk deal’s valuation of more than $20 million per MW of committed capacity set a benchmark to be closely watched by other fast-growing APAC data centre platforms, including Warburg Pincus-backed Princeton Digital Group and Stonepeak-backed Digital Edge.