AI boom could give Australia competitive edge, says major data centre investor Infratil
Infratil’s stake in CDC Data Centres has soared from $392m to $6.78bn and the company says Australia could become a major player in artificial intelligence infrastructure.
CDC Data Centres’ half owner, Infratil, said an acceleration of artificial intelligence and the development of deeper links with global tech behemoth Nvidia may hand Australia a competitive advantage as it chases a foothold in the booming sector.
Infratil, the dual-listed infrastructure investor, originally bought a 48 per cent stake in CDC in 2016 for just $392m, when the data centre operator had capacity of 30 megawatts spread across two sites in Canberra.
Infratil’s current 49.7 per cent stake in CDC was most recently valued at $6.78bn, with the Canberra-based company now the largest operator and developer of data centres across Australia and New Zealand with 2.5GW of operational and planned capacity.
The Wellington-based chief executive of Infratil, Jason Boyes, said CDC’s success was partly because it had “stuck to its knitting” with an early focus on government deals. But he added the AI boom had now grown at such a rate that countries including Australia had the potential to play a pivotal part in the global investment rush.
“Local AI is a key enabler of future prosperity for countries and of future competitive advantage,” Mr Boyes told The Australian.
“Almost anything, particularly when it’s supported by someone of the scale of Nvidia, to build out that infrastructure in our own countries, I think is definitely to be supported if it can be.”
In October, AI infrastructure group Firmus Technologies unveiled an ambitious pact with CDC and Nvidia to roll out what it claims could be $73.3bn worth of huge AI data centres across Australia by 2028. The alliance included an initial $4.5bn investment for its Project Southgate, which includes building AI factories in Tasmania and Melbourne.
CDC will also fit data centres in Melbourne, Sydney, Perth and Canberra with software and cooling technology developed by Firmus.
Mr Boyes said Nvidia’s involvement for the Oliver Curtis-backed venture was critical.
“I think it was a great story for Australia and sitting here in New Zealand, if there was an equivalent version of that here, right, we would be very happy to have a local company partnering with Nvidia. They hold all the keys here to bring that scale of infrastructure to Australia in such an accelerated time frame.”
Headed by Oliver Curtis, who was jailed for insider trading in 2016 before a business comeback at Firmus, and co-chief executive Tim Rosenfield, Firmus claims to have developed technology that uses 33 per cent less energy and 99 per cent less water than other companies in data centres.
Investments like CDC have helped Infratil to deliver 11-15 per cent returns annually on a long-term basis with a focus on digital plays such as data centres accounting for two-thirds of its assets, with renewables a further 21 per cent and the balance spread through healthcare and a majority stake in Wellington International Airport.
A $3bn takeover deal for Tilt Renewables in 2021 capped another lucrative payday with the investor then launching Mint Renewables in late 2022 with $300m in seed funding alongside the Commonwealth Superannuation Corporation.
Mr Boyes closely watches the ever changing renewables industry in Australia but said it focuses on blocking out any short-term volatility with a focus on long-term growth.
”We’ll be working on projects that we don’t necessarily expect to come to market for between three to seven to 10 years. That’s pretty much how Tilt was built. And that means a lot of the short-term volatility … we’re on the outside of it, to be honest,” he said. “We’re defining things that we think will have great long-term value, and then we’ll put them away for the future.”
Official data shows there are 56 gigawatts of renewable energy projects at various stages of development, and zero-emission sources are increasingly feeding into the grid.
However, data indicates more than half of implementation-stage projects have been stalled for over a year, reflecting structural bottlenecks in grid connections that threaten to slow the pace of deployment.
The Infratil boss said the investor treads a middle line.
“Part of the investment approach here is to not spend too much money on any of them, so that if something does happen, and for some reason it can’t be built your downside is very low,” Mr Boyes said. “Maintaining a portfolio of these potential options over multiple markets, multiple transmission nodes and systems is, in our experience, the best way to address the space.”
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