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AMP Capital Investors ups stake in Equinix as market watchers bullish in data centre REIT

Consolidation, expansion and strong demand for colocation and interconnection services are pushing stock up with year t date growth of 17.57%.

By João Marques Lima

Founder and Editor, The Tech Capital

5 Mins

August 20, 2021 | 12:00 AM BST

Australian investment manager AMP Capital Investors has considerably increased its stake in data centre real estate investment trust (REIT) Equinix (NASDAQ: EQIX).

The Sydney-based firm added 36.33% of new holding with purchase prices per stock standing between US$678 and $823.99, with an estimated average price of $740.74.

AMP Capital’s holding in Equinix amounted to 146,807 shares at the end of June. The new transaction had a 0.15% impact on Equinix’s portfolio.

Equinix has doubled its stock value since 2017, with a year-to-date (YTD) growth of 17.57% and shares trading at $814.27 before opening hours.

The company boasts a market capitalisation of $73.08 billion, with a P/E ratio of $213.65 and a dividend yield of 1.41%.

Equinix reported its quarterly results just three weeks ago, posting the 74th consecutive quarter of growth cashing in $1.658 billion in Q2 2021 compared to $1.47 billion in Q2 2020.

Charles Meyers, president and CEO of Equinix, said at the time of the results release: “We have continued to see significant momentum in our business as digital transformation outpaces previous expectations across all industries.”

The company shows confidence in continued strong market demand and upped its revenue projections for the full year to $6.619 to $6.659 billion, an increase of 10 – 11% over the previous year, or a normalised and constant currency increase of ~8%. This includes an increase of $50 million compared to prior guidance, including a $25 million foreign currency benefit when compared to prior guidance FX rates.

Earlier this month, RBC Capital’s analyst Jonathan Atkin maintained a Buy rating on Redwood City-based Equinix setting a price target of $885 per share.

Equinix’s average price target is $901.17 when 18 analysts numbers are combined.

Elsewhere, asset management firm Baron Funds has released its “Baron Real Estate Fund” second quarter 2021 investor letter in which it shows confidence in Equinix’s performance.

It said: “The shares of Equinix, Inc. gained 18% in the most recent quarter. Equinix is the premier global data centre company in the world. We believe the company is exceptionally well-positioned to continue to benefit from powerful secular demand trends including strong growth in information technology outsourcing, increased cloud computing adoption, multi-year increases in mobile data traffic, global internet traffic, and the number of connected devices.”

Expansion continues

Whilst financial matters seem in order, Equinix has also completed another expansion this time in Australia.

The operator said the AU$66m (US$48 million) capital commitment into its SY5 International Business Exchange (IBX) data centre located in Alexandria, Sydney, has successfully delivered on an additional 2,150 cabinets, bringing current capacity to 3,975 cabinets, with square footage now at 121,740.

Equinix Australia MD Guy Danskine said: “We continue to see significant momentum in Australia as technology spend accelerates, driven by the shift to as-a-service consumption models and hybrid multicloud being widely adopted as the architecture of choice.

“The expansion of our SY5 IBX reflects our strategy to continue enriching business ecosystems with added capacity, so our customers can unlock the enormous potential of digital through interconnection.

“This includes moving out of legacy data centres and locating private infrastructure adjacent to their cloud providers to reduce latency and connect to thousands of service providers on Platform Equinix.”

Equinix’s Australia portfolio includes one site each in Adelaide, Brisbane, Canberra; two facilities in Perth; five in Melbourne; and a total of eight in Sydney.

Across the wider Asia -Pacific region, the business operates 14 facilities in Japan, five facilities in Hong Kong, four data centres in Singapore, one in Seoul, one in Indonesia, and six in Shanghai.

Earlier this week, an Equinix-led group of companies including HSBC Bank (NYSE: HSBC), Nike (NYSE: NKE), Goldman Sachs (NYSE: GS), and H&M (STO: HM-B), were granted purchase rights by the Australian Competition and Consumer Commission (ACCC), to pool their electricity demand and to jointly tender and negotiate power purchasing agreements from a new or existing solar or wind electricity generation facility to be linked to the national grid, likely in New South Wales (NSW).

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João Marques Lima

Founder and Editor, The Tech Capital

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