Australian data centre operator NEXTDC to raise $795 million for AI infrastructure

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Sept 9 : Australia's NEXTDC said on Wednesday it seeks to raise A$1.1 billion ($795.63 million) through convertible notes, its third fundraising in just over four months, as the data centre operator ramps up investment in AI infrastructure.

Here are some details:

• The notes will mature on September 17, 2031, and carry a holder put option in September 2029. The initial conversion price will be set at a 32.5 per cent-37.5 per cent premium to the reference share price.

• NEXTDC also intends to enter capped call transactions with an indicative cap price 70 per cent above the reference share price to reduce potential dilution.

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• The reference share price will be determined by a concurrent delta placement of existing shares, where shares are also sold at the same time as the fund raise to let investors hedge their exposure.

• The price will not be less than A$12.40 per share, according to the Queensland-headquartered firm.

• Proceeds will fund the ongoing expansion of the local data centre pipeline, the cost of the capped call deals and transaction costs, with the remainder for general corporate use.

• NEXTDC expects fiscal 2027 capital expenditure of A$5.25 billion to A$5.75 billion, up about 55 per cent to 70 per cent from fiscal 2026 spending, as it boosts investment to meet AI-driven demand.

• The convertible structure should prove less dilutive than a straight equity raising, allowing NEXTDC to secure funding while postponing dilution unless the shares rise enough for conversion, said Hersh Oberoi, global research director at Balfour Capital.

• The deal underscores the scale of the company's funding requirements, with contracted AI-driven capacity growth requiring substantial investment before it generates revenue, Oberoi added.

• The capital raising comes as Australian data centre developers face growing constraints on power and water access that threaten to slow a nationwide data centre expansion.

• NEXTDC shares ended 2.2 per cent higher at A$12.79 on Wednesday.

($1 = 1.3826 Australian dollars)

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