Good, bad or ugly? CDC valuation up in the air

CDC develops and operates large-scale data centres across Australia.

Jarden tips there will be a partial selldown of major data centre operator CDC in the near future following the spectacular result from the $24bn AirTrunk sale last week, although putting a value on privately held data centre operators is proving a difficult task.

ASX-listed Infratil has a majority stake in CDC, which touts itself as the “pre-eminent developer, owner and operator of sovereign, highly secure and connected large-scale data centres across Australia and New Zealand’’.

But as Jarden analysts point out, and others such as Angus Aitken from Aitken Mount Capital Partners have noted, it’s hard to draw conclusions from the AirTrunk deal since not all operators can be considered equal.

“Public disclosure on AirTrunk’s performance and outlook is extremely limited,’’ Jarden analysts say. “AirTrunk’s geographic and customer mix differ, but we believe it could still be regarded as a reasonable comparator for CDC.

“The media-reported multiples could be read as implying CDC enterprise valuations anywhere between $9.5bn to $23.5bn, versus Infratil’s standing $21.1bn independent valuation but, without further disclosure on the transaction, we think it is impossible to read the reported multiples as positive, neutral or negative for CDC.’’

So in this particular case, the AirTrunk deal could be good, bad, or indifferent. What’s clear though is that data centres are an infrastructure play plenty of investors want to be in.

“We think this deal does confirm a large appetite exists for quality data centre assets among similar investors and materially lifts the chance of CDC rerating on coming capital raises/new partner entry, which we have regularly raised as a potential catalyst,’’ Jarden says.