Data centre landlord DigiCo disappoints on first day on the ASX

Data centre landlord DigiCo has made a lacklustre start to life on the Australian Securities Exchange after its $2 billion initial public offering — the nation’s biggest in more than six years.

The stock — under the ticker code DGT — opened at $4.98 on Friday, below its $5 issue price. Shares hit as high as $5.07 at noon before plunging as low as $4.50. It recovered to close at $4.55.

The deal marks the biggest ASX float since petrol station owner Viva Energy’s listing in July 2018.

The HMC Capital-backed DigiCo will seek to capitalise on the rising investor interest in the sector, with several companies seeking funds to expand their data centre portfolios on the back of the artificial intelligence and cloud computing boom.

The Sydney-based company expects to have a total of 13 properties in Australia and North America. According to its prospectus, it currently holds three properties.

In a previous note to investors, Morningstar market strategist Lochlan Halloway said DigiCo “breathes a little life back into the market and may augur a reawakening in the year to come”.

It comes as higher interest rates, inflationary pressures and weak commodity prices dent Australia’s IPO activity in recent years.

Just 13 businesses listed on the ASX in the first half of this year. But despite the growing appetite for data centres, Morningstar deemed the DigiCo stock as overpriced.

It valued the stock at $3.40 per share, a 32 per cent discount to the $5 offer price.

The “vendors are asking investors to stump up too much,” Mr Halloway wrote earlier this month. Still, the stock may rise in its debut as “data centres are a hot theme, the deal is oversubscribed and there has been a dearth of new opportunities for investors this year”, he noted.

According to data compiled by Bloomberg, DigiCo boosted Australia’s overall IPO proceeds for this year to $3.8b, more than the amount raised in 2022 and 2023 combined.