Infratil’s Digital & Decarbonisation Drive

Australia | 10:30 AM

Infratil outlined ambitious plans at its recent investor day. A subsequent data centre contract win and AUKUS anticipation raised market expectations further.

• Infratil’s share price supported by mid-September investor day and data centre contract Growth prioritised via digital infrastructure and renewables
• Management's ambition is to lift market cap to $20bn from the current $10.51bn  
• Potential for AUKUS-related OpenAI contract

By Mark Woodruff

Amidst portfolio rotation into small caps and resources, shares in New Zealand-based infrastructure investor and operator Infratil ((IFT)) --market cap $10bn-plus-- managed to buck the trend in September, stimulated by an investor briefing mid-month and the announcement of a significant new data centre contract.

Potentially adding more impetus to the rising share price, an independent valuation is due shortly for the company’s 49.75%-owned CDC Data Centres (CDC), originally known as Canberra Data Centres.

A large share of Infratil’s portfolio is tied to Australia, anchored by CDC. This business is gaining from the Federal Government’s increased backing of digital infrastructure and is progressing a 200MW high-density data centre project located south-east of Perth’s CBD.

The facility is strategically positioned to support AI and security workloads linked to AUKUS defence cooperation, leveraging its secure infrastructure and close proximity to the Henderson Naval Base.

Overall, the investor day underlined a strong portfolio performance and a sharpened strategic focus on digital infrastructure and renewable energy, alongside active capital recycling.

Management reaffirmed FY26 guidance, including lower capex and higher cash flows.

CEO Jason Boyes explained management is prioritising growth in fast-growing digital infrastructure and renewables while simplifying its portfolio, targeting 11-15% annual returns over a rolling 10-year period.

Regarding digital infrastructure, CDC reported surging demand during FY25 (March year-end), driven by cloud and AI workloads. The platform has 15 sites live and seven under construction.

CDC remains on track to double FY25 earnings by FY27, with customer contracting for the remaining capacity nearly complete.

Contract win

Following the investor day, Buy-rated Citi anticipated a near-term CDC contract win and opened a short-term upside view on the Infratil stock price.

Just days later, management at CDC announced a major contract win, securing around 100MW of new capacity and validating Investor Day commentary on AI and cloud-driven growth.

Following the announcement, Jarden has greater confidence in CDC's accelerating profit momentum. It's thought hyperscale contract wins highlight the company's advantage in sovereign-grade credentials, specialised cooling capabilities, and long weighted average lease expiries (WALEs).

This latest contract lifts total contracted capacity to 575MW, up from 372MW of operational capacity in May 2025. Importantly, Citi highlights, CDC has now locked in 95% of the incremental earnings needed to deliver on its goal of doubling EBITDA by FY27 versus FY25.

Progress toward securing CDC’s FY27 targets should lift market confidence and support a narrowing of the discount to reported net asset value (NAV), in Citi’s view.

Infratil’s overall portfolio exceeds NZ$18bn, concentrated in high-growth infrastructure sectors. Data centres and renewables make up more than 80% of assets, accompanied by additional stable cash flow from airports, telecommunications, and healthcare assets.

For further background on Infratil see FNArena's recent article at https://fnarena.com/index.php/2025/09/10/infratils-growing-undervalued-digital-exposure/

‘Big 3’ assets

Infratil’s largest business exposures are CDC at 40% of book value (NZ$7.2bn), New Zealand telco provider One NZ (telecom and broadband services) at 20% (NZ$3.7bn), and Longroad Energy at 12% (NZ$2.1bn).

Alongside CDC, three other major portfolio companies presented at the Investor Day: US renewable developer Longroad Energy; One NZ, Infratil’s 49%-owned telecommunications business; and Gurin Energy, the Singapore-based Asian renewables platform.

UBS believes there is further growth in Infratil’s net asset value (NAV) via Longroad due to strong demand and tax qualification post 2030, and via One NZ owing to better execution and a refocus by management on return on invested capital (ROIC).

Management’s ambition to lift market capitalisation to $20bn from the current $10.51bn within five years depends on delivery from the ‘Big 3’ assets (CDC, Longroad and One NZ), while also creating room for Asian renewables to contribute more meaningfully to value creation.

UBS comments key assets to support this ambition include Project Vanda (within Gurin), a renewable energy initiative with potential to create up to US$500m in value, along with expansion into new sectors such as transportation and fleets, logistics and automation, and financial systems.

On Longroad, UBS highlights recent Internal Revenue Service (IRS) guidance on the Inflation Reduction Act (IRA) restores project economics through 2030 and beyond, a positive development after 12 months of uncertainty. Potential M&A opportunities are also noted, as smaller developers struggle with the scale of capital required.

Following the September investor day, Macquarie lowered the discount applied to its valuation of Longroad partly because management reaffirmed its 2028 Opco targets of 10GW (operational or under construction) and US$700m of earnings.

Opco, short for operating company, is that part of Longroad which owns and operates renewable assets (solar, wind, storage) over the long term. It generates recurring earnings from contracted power sales, making it a more stable base for valuation.

The development company, or Devco, originates, designs, and sells projects and its earnings are lumpier, depending on development sales.

Despite a challenging economy, the One NZ business is targeting stronger returns on invested capital by driving cost savings through IT transformation and AI initiatives, while also reducing capital intensity, explains Macquarie.

Citi also describes Gurin as a key future growth platform.

Management emphasised Gurin’s scale and potential in Asian renewables at the investor day, citing a team of around 100 people, including 45 based in Singapore. Gurin is active across seven markets including Japan, South Korea, Thailand, Singapore, and Malaysia.

Citi explains the business has 8GW of projects under development and is targeting more than 250GW of opportunities by 2030, with over half focused on OECD Asia and the balance in emerging Asian markets.

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