SYDNEY: Data centre operator AirTrunk is delaying a planned initial public offering (IPO) of a real estate investment trust (REIT) in Singapore until next year as higher interest rates and market volatility temper investor demand, according to people familiar with the matter.
The Blackstone Inc-backed company had been planning to start formally gauging investor interest for the US$1.5bil REIT IPO at the start of October, the people said, asking not to be identified because the information is private.
A planned IPO in Australia by another data centre company, Firmus Grid Ltd, collapsed last week.
The Nvidia Corp-backed firm failed to bring in enough demand at the valuation it sought, reflecting growing investor caution about artificial intelligence infrastructure deals that hinge on future earnings.
To sweeten its deal for investors, AirTrunk had considered offering a roughly 6% yield for its REIT, up from a previously envisaged 5.5%, the people said.
However, September’s interest rate rise in the United States and the prospect of further increases mean investors are still cautious, they said.
REITs are rate-sensitive and therefore come under pressure when borrowing costs are high.
The data centre subsidiary of Philippine telecommunications firm PLDT Inc said last week it would defer its REIT IPO to next year given rising interest rates. Singapore’s main REIT Index has tumbled 12% since late July.
AirTrunk’s deliberations over details such as the size and timing of the potential IPO are ongoing, the people said.
Dow Jones Newswires reported earlier that AirTrunk was delaying plans for the Singapore listing because of market volatility and uncertainty over US rates.
Representatives for AirTrunk didn’t respond to requests for comment. Blackstone declined to comment.
AirTrunk, which was founded in Sydney in 2015, operates data centres in Australia, Hong Kong, India, Japan, Malaysia and Singapore, according to its website. — Bloomberg
