They are looking to raise $280M, probably $140-150M required for new land purchases. So leaves $130-140M working capital. As I don't expect construction to start until it is materially needed. Perth and Canberra haven't shown to be a good use of capital.
Arguably they were to slow getting S2 & M2 to market, especially S2. This is probably an attempt to correct that.
Also once you jump up to the higher energy requirements it will require a much greater committment and forward planning with the Electricity Authorities. They might need to do significant network alterations, build out new substations, plan new transmission routes.
Originally when Airtrunk was being built out a few people put the kibosh on the size of their DC's, but here we are.
I always thought they should have reached for the Higher Capacity with S2 (especially considering it's still only getting built out now).
One thing with a lot of these Multi-DC proposals is they aren't achieving a high level of geographic and hence electrical separation. (e.g. Global Switch East & West, All the Equinix Sydney sites, NextDC S1, S2 and potentially S3). Major incidents could potentially limit access or worst case affect all DC's at once.
I think it's a smart time to raise Capital, while they have a strongly supported share price. It's a smart strategic decision to begin to lock up sites.
However I won't be reading too much into customer demand without appropriate contract announcements and actual utilisation increasing).
We are moving into a period of the highest intensity of Capital Investment and hence new space/power ever. (All >20MW Equinix SY4, (25MVA+) Global Switch Syd East (40MVA), Airtrunk (70MVA+), NextDC S2 (30MW+), With future announced plans of NextDC S3 (80MW). Not to mention all the other ~10MW players (Fujitsu's, Digital Realty, Metronode, Macquarie Telecom, etc.)
I like the Sydney market Demand wise, but it also has the greatest increase in supply which will take a while to chomp away.
Don't forget S2 & M2 are already ~2.5-3 times the size of S1 & M2. So some reality needs to be maintained about fill rates.
I still feel their will be more competiton going forward bringing the $/MW figure down slowly over time. So need to be careful with any extrapolations.
Overall good capital management and derisking by the company, definitely feel they are making the right decisions for the company. Just like how they were positioned in the market 2 years ago (dominant player).
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