Two firms tapping capital markets to help fund data centre purchases

Two firms with interests in the data centre sector - Mapletree Industrial Trust (MIT) and Keppel DC Reit - have gone to the capital markets to raise investment funds.

MIT is looking to raise at least $350 million through a private placement to partially fund its joint purchase of a North American data centre portfolio worth US$1.37 billion (S$1.9 billion). The trust said this would cost it about $965 million.

It is issuing 158.3 million new units at $2.211 to $2.265 per unit, with an option to issue up to 22.6 million additional units that would raise at least a further $50 million, the trust's manager said yesterday.

An issue price of $2.211 represents a discount of about 5 per cent to the volume-weighted average price of $2.3278 of all trades done on Monday, the day before the placement deal was signed. A price of $2.265 represents a 2.7 per cent discount.

MIT is in a joint venture with Mapletree Investments to acquire 10 data centres and co-invest in three centres in North America.

About $5.6 million of the gross proceeds will be used for fees. MIT's units closed flat at $2.33 on Monday. It called for a trading halt yesterday before the announcement.

Keppel DC Reit has embarked on a similar route, raising $478.2 million through a private placement of 135 million units at an issue price of $1.744 a unit, and a preferential offering of about 142 million units at an issue price of $1.71. The issue price was at a 2.5 per cent discount to the volume-weighted average price of $1.7882 last Friday, before the underwriting agreement was signed.

Total gross proceeds will amount to $478.2 million, comprising about $235.4 million from the private placement and about $242.8 million from the preferential offering.

About $438.6 million will partially fund the acquisition of a 99 per cent stake in Keppel DC Singapore 4 data centre, and a 100 per cent stake in 1-Net North Data Centre.

A further $31 million will be used to fund capital expenditure and about $8.6 million for estimated fees from the fund raising. Any balance will be used for general corporate purposes, the manager said.

The manager said both acquisitions are due to be completed in the fourth quarter and will be highly accretive to Keppel DC Reit's distribution per unit. Its assets under management will rise 30.7 per cent to $2.58 billion, comprising 17 data centres globally.

A version of this article appeared in the print edition of The Straits Times on September 18, 2019, with the headline 'Two firms tapping capital markets to help fund data centre purchases'. Print Edition | Subscribe