HMC Capital acquires iseek platform for AUD $400 million

HMC Capital has announced its acquisition of iseek, a co-location data centre operating platform, for AUD $400 million.

The acquisition aligns with HMC's strategy to launch a Global Digital Infrastructure Platform, known as DigiCo. This strategic move includes significant acquisitions and developments as HMC has already secured AUD $2.5 billion of operating assets in Australia and is conducting exclusive due-diligence on an additional AUD $1.6 billion of data centre assets in North America.

This transaction, described as a seed for the ASX-listed DigiCo Infrastructure REIT (DigiCo REIT), will add over AUD $4 billion in assets under management (AUM), showcasing the company's expansive growth strategy in the digital infrastructure field.

The purchase price for iseek is comprised of an AUD $150 million upfront cash payment and AUD $250 million in scrip for the DigiCo REIT's Initial Public Offering. The majority of the acquisition scrip held by iseek's major shareholders and founders will be escrowed until the release of the financial results for the fiscal years ending June 2025 and June 2026.

iseek operates seven data centres in Queensland, South Australia, and New South Wales, boasting a total of 6 megawatts (MW) of installed IT capacity and a future expansion pipeline of 27.6 MW. The company services a diverse client base of more than 500 customers, including government, enterprise, and hyperscale tenants.

The acquisition will bolster HMC Capital's DigiCo REIT, a diversified global portfolio that includes ownership, operation, and development of data centres. The REIT aims to capture total returns driven by a target distribution yield of 4% and growth from revenue increases, lease-ups, and developmental opportunities.

David Di Pilla, HMC Managing Director and CEO, commented, "iseek is a leading colocation data centre platform with a high quality and diverse customer base across government, hyperscale and enterprise customers. This acquisition is also highly complementary to our recent acquisition of Global Switch Australia with a number of benefits including enhanced geographic and customer diversification. The DigiCo platform will have over 100 dedicated people across iseek, Global Switch Australia and StratCap, and represents the beginning of our strategy to build a world-class operating platform providing investors with exposure to institutional grade digital infrastructure assets in both Australia and North America."

iseek's leadership team also expressed enthusiasm about the partnership. CEO Scott Hicks and Founder & Executive Director Jason Gomersall stated, "We are excited to be partnering with HMC Capital's DigiCo platform to accelerate iseek's next phase of growth. A significant portion of the acquisition proceeds will be taken in scrip in the DigiCo Infrastructure REIT IPO which is a testament to our strong conviction in the REIT's investment strategy and growth runway."

Meanwhile, HMC Capital's newly proposed ASX-listed DigiCo REIT is expected to raise approximately AUD $2.6 billion in new equity. The REIT plans to support stabilised assets, value-add, and development opportunities, with a planned IT capacity extending to over 161 MW across Australia and North America. Target development returns are projected at yields exceeding 10% on cost.

The governance structure of the DigiCo REIT's board includes individuals with complementary specialisations, comprising Independent Chairman Joseph Carrozzi AM, alongside a suite of experienced non-executive directors, including The Hon. Mark Arbib and Rachel Grimes AM.