Chinese-owned data centre provider Global Switch Australia will be acquired by asset manager HMC Capital for $2 billion, more than four years after federal government agencies were told to stop using its services over national security concerns.
On Thursday morning, HMC Capital announced a $300 million raise with institutional investors for its its purchase of Global Switch Australia, controlled by steel manufacturer Jiangsu Shagang, for $1.92 billion.
The deal will seed HMC Capital’s new global digital infrastructure investment vehicle DigiCo REIT, which will be listed. Global Switch operates a 26MW data centre in the Sydney CBD and has the potential to upgrade its capacity to 88MW.
The acquisition was reported as nearing earlier this month, with HMC Capital beating bids from the Queensland Investment Corporation, Canada Pension Plan Investment Board, Switzerland-based Partners group, and New York-based Stonepeak, after months of speculation.
HMC Capital managing director and chief executive David Di Pilla said the Global Switch Australia deal was a “major acquisition” given the strategic location and has significant expansion opportunity of its data centre.
“This is consistent with our strategy to build a world-class global platform providing investors with exposure to institutional grade digital infrastructure assets underpinned by attractive megatrends,” he said.
To add to DigiCO REIT, HMC Capital is also undertaking exclusive due diligence to acquire a further $2 billion worth of data centre assets in North America, as well as a “portfolio of Australian co-location data centres”.
“Digital infrastructure represents a major funds 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,” Mr Di Pilla said.
Commonwealth departments were previously told to move their data out of Global Switch by September 2020, although many agencies missed the deadline, including the departments of Defence and Home Affairs.
Defence has a current property lease with Global Switch that gives it access the Ultimo facility until September 2025, however it is in the process of migrating unclassified and protected-level data. No secret or top secret data remains.
Home Affairs, the Australian Securities and Investments Commission, and the Australian Communications and Media Authority migrated by their new target date in mid-2022. The Australian Digital Health Agency migrated moved from the facility shortly after.
The Australian Taxation Office also missed the September 2020 deadline and was only able to completely remove its data and assets from the facility in August 2023, swapping Global Switch for CDC Data Centres after a decade.
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