As demand for cloud-based solutions continues to grow, data centre operator NEXTDC (ASX: NXT) has announced a $672 million capital raising to bulk up its balance sheet and develop a new tower in Sydney.
Unlike most ASX-listed companies, Brisbane-based NEXTDC has been trading at record highs lately and management appears to be making the most of the opportunity.
The group will raise the funds at $7.80, representing a 9.4 per cent discount to the five-day volume weighted average price (VWAP) and a 15 per cent discount to the last closing price of $9.18.
NEXTDC announced $350 million would go towards an initial investment in developing the S3 tower in Sydney - the company's third data centre in the NSW capital which would include 12MW of upfront capacity.
The S3 data centre is 10km from the Sydney CBD in Gore Hill, with practical completion for Phase 1 expected in 1H FY22.
The facility will have a target total capacity of 80MW.
"Based on the strong level of orders already received for S2 and our growing confidence in the forward sales pipeline, NEXTDC is confident that the projected demand in Sydney, together with our return expectations," says NEXTDC CEO Craig Scroggie (pictured).
The remainder of the capital raising will include $307 million growth driven initiatives such as capacity requirements and development opportunities, as well as $15 million in transaction costs.
"NEXTDC continues to see significant demand for its data centre services during a turbulent market environment due to Covid-19," says Scroggie.
"We have decided to prudently equity fund near-term growth opportunities in this period of market volatility to continue to support customer demand and ensure there is no loss in the momentum of the Company's development."
The $672 million placement will be conducted today and is fully underwritten by the joint lead managers and bookrunners, Citigroup Global Markets Australia and Royal Bank of Canada.
An uncapped share placement plan (SPP), offering eligible shareholders the ability to subscribe for up to $30,000 of new shares, will then open on 14 April and remain open until 5pm AEST on 30 April.
The company has also reaffirmed its FY20 earnings guidance with underlying EBITDA in the range of $100-$105 million and revenue between $200-206 million.
Strong demand lifts IDP Education raising by 29 per cent
Elsewhere, IDP Education (ASX: IEL) has successfully completed a $225 million fully underwritten institutional placement, and due to significant demand this amount was up from the expected $175 million announced yesterday.
The proceeds of the Placement will be used to enhance balance sheet strength and financial flexibility, and to support the business during the current macro-economic uncertainty by materially increasing liquidity.
"We are very pleased with the strong level of support from our shareholders, as well as other investors," says IDP chairman Peter Polson.
"The prudent operational and capital measures we announced will ensure that we are well placed to navigate through the current period of uncertainty.
"We are well positioned to capture market opportunity and continue to deliver value for our customers and shareholders."
The company also expects to launch an SPP worth up to $15 million on 14 April, lasting until 5pm Sydney time on 4 May and giving eligible shareholders the opportunity to apply for up to $30,000 of new shares.
Embattled travel company Webjet (ASX: WEB) also recently announced a $275 million equity raise to help it push through the Covid-19 crisis, with an oversubscribed institutional component that has raised $231 million.
When the retail component of the offer is completed, Webjet is expected to have raised a total of $346 million.
Business News Australia