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Published 10 January 2013 12:03, Updated 14 January 2013 07:06
NextDC chief Bevan Slattery ... off-loading property assets was a logical step for NextDC as it seeks new opportunities for growth. Photo: Jesse Marlow
The slow state of the IPO market hasn’t deterred serial entrepreneur and former Young Rich member Bevan Slattery from investing in the listed spin-off of his NextDC data centre business, Asia Pacific Data Centre Group.
The new $70 million venture joined the ASX on Wednesday and its stock has been trading steadily on small volumes. The initial 61¢ share price reflects the invested capital by Slattery and others.
APDC will operate as a property trust and was set-up to take ownership of NextDC’s data centres; NextDC will remain as a tenant. Slattery is the biggest shareholder with a 17 per cent stake after NextDC, which has 23 per cent of the stock.
Slattery has a well-earned reputation as one of the best young entrepreneurs in the country. He started NextDC after selling PIPE Networks to TPG Telecom for $373 million in 2009. He and another former Young Rich member Stephen Baxter started PIPE in 2001.
Speaking to BRW, Slattery says that APDC’s income stream makes it a good candidate for a public listing.
“This is very much focused on yield,” he says. “In a market with declining bank deposit rates, yield is becoming fairly attractive.”
He says off-loading the property assets was a logical step for NextDC as it seeks new opportunities for growth.
In recent times, few others have been happy to rely on equity markets to sell assets. Ernst & Young’s latest IPO report shows that in the 11 months to November 2012, there were just 36 IPOs, 63 per cent less than in 2011.
The biggest of them, Woolworths’ establishment of the Shopping Centres Australasia Property Group, accounted for more than half of the $820 million raised last year.
Another Young Rich member, Patrick Grove, was behind the sixth biggest IPO in 2012 – the iCar Asia float, which raised $10 million in September.
Slattery is on the NextDC board but not involved in the daily management of NextDC or APDC.
He says he is spending most of his time working on a new venture called SubPartners, which is planning to run a submarine cable between Perth and Singapore. The cable will be used to carry internet and phone traffic between Australia and Asia.
The infrastructure serving the route is old and demand is growing, according to Slattery. Ted Pretty, another Next DC director and chief executive of Hills Holding, is also involved.
More details about the $150 million venture will be released by the nascent company in coming weeks. Announcements have not yet been made about how capital will be raised but Slattery says he probably won’t look to another listing.
“Its more of a cyclical business,” he says.