Shares in HMC Capital’s new data center company DigiCo REIT fell in value on the company’s first day trading on the Australian Stock Exchange (ASX)
DigiCo raised AU$2 billion ($1.3bn) in its initial public offering (IPO) at a share price of AU$5 ($3.25), but saw its price fall to AU$4.55 (US$2.94) by the time the ASX closed on Friday.
The IPO is Australia’s biggest for six years, reflecting high interest in data center investments across the Asia Pacific region.
But some market watchers believe the data center sector is running too hot, which may be to blame for the dip in DigiCo’s price.
According to Reuters, analysts at Morningstar have given DigiCo a high uncertainty rating, saying its stock has a fair value estimate of AU$3.40 (US$2.21) per share. Morningstar’s Roy van Keulen said its IPO price assumes high rates of return, which may not persist given the “competitive nature of the industry.”
HMC is using DigiCo as a vehicle for its growing data center portfolio. After acquiring North American digital infrastructure investor StratCap in February, HMC purchased Global Switch’s Australian unit and local operator iseek. Earlier this week it revealed it was buying a 32MW data center in Chicago, Illinois, from Prologis.
In total, DigiCo will manage 13 data centers serving 586 customers. It has agreed to deals for the acquisition of three additional North American enterprise and hyperscale data centers for AU$2.29 billion ($1.5bn) which have yet to be publicly announced.