HMC Capital (HMC) M&A Announcement summary

Deal rationale and strategic fit

• Establishes a global digital infrastructure platform (DigiCo) with both listed (DigiCo REIT) and unlisted funds, targeting yield and growth in digital infrastructure.

• Acquisition of Global Switch Australia, a 26MW data centre in Sydney CBD, as a seed asset for DigiCo REIT, with expansion potential to 88MW.

• Positions HMC as a leading provider of digital infrastructure, leveraging industry megatrends like AI-driven data demand and supply constraints in Sydney.

• Assembles a management team with over 20 years' average experience in the data centre sector.

• Additional seed assets under exclusive due diligence, mainly in the US, to further scale the platform.

Financial terms and conditions

• Net acquisition price for Global Switch Australia is $1.937bn, net of $184m cash.

• Acquisition funded by $800m debt facility, $300m asset financing, and a $300m fully underwritten institutional placement at $8.75 per share (5% discount to last close).

• Placement represents 9.07% of HMC's ordinary shares, with new shares ranking equally and eligible for a 6.0 cent dividend for the half ending 31 Dec 2024.

• HMC will have ~$3bn balance sheet underwriting capacity post-raising to support the acquisition and DigiCo REIT establishment.

• HMC balance sheet liquidity of $1.9bn post-placement and senior facility upsizing.

Synergies and expected cost savings

• Significant growth opportunity through expansion of IT capacity from 26MW to 88MW and value-add development pipeline.

• Lease-up and development pipeline expected to drive mid-teens EBITDA growth across the platform.

• Targeting 20%+ ROIC from new funds management and co-investment income in the medium term.