HMC Capital, led by David Di Pilla, has made a significant impact on the Australian market with the launch of DigiCo REIT, the largest new public listing in years. This IPO, focusing on the rapidly expanding AI data center sector, will commence trading on December 12th with a substantial market capitalization of $2.74 billion.
This impressive valuation reflects strong support from major financial institutions and prominent investors. The initial strong demand from underwriters for this digital infrastructure property trust resulted in a $100 million increase in its capitalization.
According to David Di Pilla, this robust investor interest highlights the exceptional quality of the underlying assets. It also underscores the growing demand among investors to gain exposure to the high-growth digital sector, which can be challenging to access through traditional investment options.
The rapid rise of AI applications, such as ChatGPT and Synthesia videos, is driving unprecedented growth for tech giants like Nvidia, Amazon, and Google. This surge in AI activity is directly fueling demand for data centers, the critical infrastructure that houses and processes the massive amounts of data powering these technologies.
Data centers are energy-intensive facilities, with their capacity measured in megawatts, reflecting the substantial power required to operate servers and cooling systems. This energy consumption is a key factor in the industry’s growing economic significance.
The recent $23.5 billion sale of AirTrunk, a leading data center provider, to Blackstone underscores the sector’s immense value. This transaction propelled AirTrunk’s founder, Robin Khuda, into billionaire status.
Revised projections indicate a surge in demand for data center capacity in Australia. Morgan Stanley has significantly increased its 2030 forecast for the sector’s energy consumption to 3200 megawatts, a 700-megawatt jump. This underscores the rapid growth of the data center industry and its escalating energy needs. By 2030, data centers are expected to consume roughly 8% of the nation’s total electricity generation, a considerable leap from the current 2%.
Both DigiCo’s Australian and U.S.-based data centres are likely to take advantage of this anticipated demand.
To establish its new company and support its growth, HMC has finalized two significant property deals over the past two months. In October, it acquired Global Switch Australia for $1.9 billion, and in December, it completed a $400 million acquisition of iseek. DigiCo will kick off with 13 assets in its portfolio.
Di Pilla highlighted significant growth potential for Global Switch’s two inner-Sydney data centers. Currently operating at 26 megawatts, these centres can expand to 88 megawatts, positioning them among the largest in the country.
He emphasized the immense growth potential of the US market, stating that its opportunities could be tenfold greater than any other market globally. Accordingly, DigiCo will prioritize expansion efforts within the US market.
Since Di Pilla capitalized on Woolworths’ abandoned superstores, left vacant following the retailer’s unsuccessful 2019 bid to compete with Bunnings, HMC has seen a remarkable and rapid ascent in the property market.
The company, initially known as HomeCo, was founded by Di Pilla with support from prominent Australian retail figures, has rapidly expanded from its roots in repurposed Masters hardware stores. Key investors included Mario Verrocchi and Jack Gance (Chemist Warehouse), and Zac Fried and Morry Fraid (Anaconda, Spotlight). This powerful consortium transformed abandoned retail spaces into a cornerstone of the Australian retail landscape.
Over time, it has grown into a prolific property manager, producing significant revenue and assets. Today, it is valued at around $11.70 per share, a notable rise from its original listing price of $3.64 on the Australian index.
Subsequently, the company diversified its investments, establishing the HealthCo Healthcare and Wellness REIT, a retail-focused Daily Needs REIT, and the HMC Capital Partners Fund, a private equity venture. An Energy Transition Platform, led by former Prime Minister Julia Gillard, is projected to launch later this year.
