NEXTDC taps investors for $618m to develop new data centres in Malaysia, New Zealand

Digital infrastructure group NEXTDC (ASX: NXT) has announced two new data centre developments in Malaysia and New Zealand as part of a regional expansion strategy that will be funded by investors in a fresh $618 million raise.

The data centres are set to be built on recently purchased commercial property sites in Kuala Lumpur, Malaysia and Auckland, New Zealand, with the Brisbane-based firm intending to invest $250 million and $140 million into each project respectively.

A further $150 million will also be pumped into accelerating the fit out of a S3 facility in Sydney.

The capital raising comprises a fully underwritten one for eight pro-rata accelerated non-renounceable entitlement offer to raise $618 million, with the offer priced at $10.80 per share – an 8 per cent discount to its last trading price of $11.78.

Construction of the sites in Malaysia and New Zealand are expected to commence in FY24, with an aim for practical completion by 1H FY26.

"We are thrilled to announce our expansion into Malaysia and New Zealand, which marks an important milestone in our growth strategy,” NEXTDC CEO Craig Scroggie said.

“Building upon the success we have achieved in Australia over the past decade, we aim to replicate our proven business model in these new markets.

“As always, our focus remains on creating a highly diversified ecosystem of enterprise, connectivity, cloud, and managed service provider customers. New Zealand and Malaysia are just the first greenfield geographic expansion opportunities outside of Australia, and we are excited about the possibilities ahead."

Founded in 2010, NEXTDC is Australia’s largest locally owned and operated data centre provider, providing organisations with direct access to public cloud platforms, networks, and IT services infrastructure.

Off the back of today’s news, the company has updated its FY23 guidance and now expects data centre services revenue to land in the range of $350 million to $360 million, compared to its earlier guidance of $340 million to $255 million.

Underlying EBITDA is expected to range between $192 million to $196 million, instead of $190 million to $198 million.

Capital expenditure has increased to $670 million to $720 million from a previous expectation of $620 million to $670 million.

Following the completion of the offer, NEXTDC will have pro-forma tangible asset backing of $3.8 billion and pro-forma liquidity of $2.6 billion.

Today’s announcement comes almost seven months after NEXTDC opened a $1.5 billion centre in Melbourne’s West Footscray in order to meet an explosion in demand for data storage.

The demand for data storage is driving a rapid roll-out of new centres by NEXTDC across Australia, with facilities in Adelaide and Darwin currently in train. This builds on the company’s existing network of centres in Brisbane, Canberra, Perth and the Sunshine Coast.