Global Switch has agreed to sell its Australian assets to investment manager HMC Capital for AU$2.12 billion (US$1.41bn).
The deal for Global Switch Australia Holdings (GSAH) will provide Global Switch with capital to grow other parts of its business, the company said on Thursday morning. The deal is expected to close later this year or early in 2025, subject to regulatory approval.
According to Global Switch, the money will “strengthen the company’s balance sheet and provide substantial further capital for Global Switch to capitalize on significant growth opportunities presenting themselves in other prime geographies through redevelopment, the integration of the latest cooling technologies, and the building of new data centers to meet burgeoning AI and high-performance computing (HPC) demand.”
Ashley Muldoon, CEO of Global Switch, said: “The proceeds from the sale of our historic economic interests in GSAH will enable us to accelerate our ambitions to meet the demand for data center capacity in our critical hubs around the world, and to continue to ensure that our customers’ needs are met as demand increases for AI and HPC deployments.”
News that HMC Capital was in talks to buy GSAH emerged earlier this month, when the company revealed it was conducting due diligence ahead of purchasing a range of data center assets.
The sale of Global Switch has been mooted for several years, since Chinese steel giant Jiangsu Shagang Group took control of the company in 2016. It was talking to potential acquirers back in January 2021 with an eye to a possible $10-11 billion sale of the entire firm.
More than a dozen companies were named as potential buyers, and last year investment funds EQT, KKR, and PAG were reportedly shortlisted for a final round of bidding, but talks were said to have ‘ground to a halt’ in January 2023 over a gap in company valuations.
Then, in July, Global Switch reportedly rejected several bids for its Australia business because they did not meet its valuation. At the time, AFR reported that Stonepeak, Queensland Investment Corporation, and the Canada Pension Plan Investment Board were among those vying for control of the business, but they have been beaten to the punch by HMC Capital.
GSAH operates two adjacent conjoined data center buildings in the Ultimo area of Sydney on an 11,090 sqm (119,370 sq ft) site. The 392-422 Harris Street property is known as Sydney West, while 273 Pyrmont Street is known as Sydney East.
The seven-story West currently offers 20.5MW, with the newer East site boasting 22MW. The company recently filed to expand the site with additional floors on the existing buildings.
HMC manages more than AU$10bn on behalf of institutional, high net worth, and retail investors. In July it purchased North American digital infrastructure investor StratCap for US$28.5 million.
Buying GSAH is the first step in HMC establishing a global digital infrastructure platform, DigiCo Infrastructure REIT, which it intends to list on the Australian Stock Exchange. HMC is currently conducting exclusive due diligence on a number of other data centers, most of which are in the US, which it could acquire.
David Di Pilla, HMC Managing Director and CEO, said: “Digital infrastructure represents a major funds management growth opportunity for HMC and we believe the establishment of both a listed and unlisted vehicle will enable HMC to take advantage of high quality acquisition opportunities across the value chain to generate attractive risk adjusted returns."
