Australia’s DigiCo REIT extends decline in second ASX session

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(Reuters) – Shares of Australian data centre landlord and operator DigiCo Infrastructure REIT extended declines in their second trading session on Monday, after marking the country’s biggest initial public offering (IPO) in six years.

The stock was down 6.8% at A$4.24 as of 0318 GMT, after falling as much as 11.7% earlier in the session. It had an offer price of A$5.00.

DigiCo, which raised A$2 billion ($1.27 billion) in its IPO, the biggest since Viva Energy’s A$2.65 billion listing in July 2018, is banking upon investor appetite for data centres, driven by the demand for artificial intelligence-based services.

However, investment research firm Morningstar last month gave DigiCo a “high uncertainty” rating, with a fair value estimate of A$3.40 per share.

DigiCo manages an A$4 billion portfolio of data centres across the United States and Australia. It said it will use part of the IPO proceeds to buy two large-scale adjoining data centre sites near Sydney with a contracted capacity of 20 megawatts.

Shares in asset manager HMC Capital, which retained an 18.2% stake in DigiCo after its listing, fell as much as 11.3%, making it the top loser on the benchmark index, which was down 0.4%.

($1 = 1.5704 Australian dollars)

(Reporting by Aaditya Govind Rao in Bengaluru; Editing by Varun H K)