NextDC: Corporate Action: Raises for International Expansion, Sydney Demand; Lift FVE to AUD 11.20

No-moat NextDC is increasing its share capital by around 12.5% through a fully underwritten 1-for-8 pro-rata accelerated nonrenounceable entitlement offer of new fully paid ordinary shares to raise AUD 618 million. The entitlement offer is priced at AUD 10.80 per new share, a discount of 7.5% to the current trading price of AUD 11.64. It is also at a small discount to our new fair value estimate of AUD 11.20, which we raised from the previous AUD 11.00 on our positive views on the use of the funds, particularly the accelerating of a fit-out of a Sydney data centre to meet unexpectedly strong demand. The institutional offer raised around AUD 416 million, while the retail offer opens on May 18 and is expected to close on May 31. We suggest investors take up their entitlements, provided doing so is consistent with individual investing goals.