The Infratil Ltd (ASX: IFT) share price is lifting this morning after the company released an update on the valuation of its investment in Canberra Data Centres (CDC).
At the time of writing, the Infratil share price is trading up 1.8% at $7.04.
Increase in demand driving value
After the independent valuation, Infratil’s 48.1% investment in CDC is now valued at between $2,039 million to $2,334 million, as at the end of December 2020. This is a substantial increase from the previous valuation in September, ranging between $1,597 million to $1,807 million.
The nearly 28% uplift in value, from the bottom end of valuer estimates, is reportedly a result of accelerated demand in both new and existing customers for its data centre services. This surprise uptake has the company expecting existing data centres to reach capacity sooner than first thought.
Infratil said it would provide further details of CDC’s growth plans at the company’s investor day on 16 February.
The price for performance
The New Zealand-based infrastructure investment company implements an incentive model. The fee payable by Infratil acts as a monetary reward to the entities for delivering growth in the value of the investment.
The revised value of its CDC investment is expected to increase the international portfolio annual incentive fee (IPAIF) to $147.6 million. This is up from $57.7 million since the provided September estimate.
Infratil noted that it has not assessed incentive fees since September in regards to other investments. These investments include Tilt Renewables Ltd (ASX: TLT), Longroad Energy, Retire Australia, and Australian Social Infrastructure Partners.
The final IPAIF will be payable to investments on 31 March 2021.
The Infratil share price has performed solidly over the last year, returning 39.9% in the last 12 months. This compares to the S&P/ASX 200 Index (ASX: XJO) which fell 2.17%.
The company performance has not gone unrecognised either – with AustralianSuper lobbying a takeover bid back in early December. This offer was rejected by the board, as they believed it undervalued the high quality and unique portfolio of assets.
Infratil expects it will conclude its strategic review of its investment of Tilt Renewables within the next 6 months. The company conveyed the potential of divestment of the renewable energy provider back in December.