Real estate solutions provider Figtree Holdings has, through its 27%-owned associate company DC Alliance (DCA) subscribed to 138.9 million shares in DXN, a manufacturer and operator of modular data centres, for A$1.25 million ($1.23 million).

DXN, an Australian Stock Exchange (ASX)-listed company, has data centres in Sydney, Darwin and Tasmania.

The subscription was made via a placement exercise, with DCA as a lead investor. The subscription shall be satisfied by DCA using internally generated funds. The subscription price 0.9 Australian cents represents a 16% discount to DXN’s 30-day volume weighted average share price (VWAP) as at Sept 6.

DCA will also have the option, subject to approval in DXN’s upcoming general meeting as well as approval of the Foreign Investment Review Board in Australia, to subscribe for a second tranche of placement shares at a value of A$1.25 million by Dec 15.

 The placement price will be at a 20% premium to the 10-day VWAP, subject to a maximum price of 1.5 Australian cents.

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In addition to the placement, DCA and DXN are working towards an agreement to establish a strategic alliance to cross sell the Australian data centre assets. It is currently intended that this agreement will address the two companies working together to market and sell data centre services, colocation racks, and connectivity across the two data centres located in Perth and Sydney. 

DCA and DXN plan to share sales and market insights to develop a joint customer value proposition for colocation sales and establish a common set of products between DCA and DXN, which will enhance the experience for current and potential clients. Subject to signing a binding agreement with DXN, the enlarged data centre network would result in stronger Australia wide edge coverage, and firmly establish the duo in the industry. 

DCA and DXN would also jointly explore expanding into other geographical markets. 

“This subscription investment and the strategic alliance between DCA and DXN are exciting steps forward since we acquired a strategic stake in DCA last September. We are happy to support them as the demand for data centres continue to be healthy from rising cloud adoption, demand for smart devices and wireless networking technologies,” says Danny Siaw, managing director of Figtree.

The subscription and the placement, in the event the option is exercised, are not expected to have a material impact on the earnings per share and net asset value per share of the group for the current financial year ending Dec 31.

Shares in Figtree closed flat at 6.1 cents on Sept 8.

Photo: Figtree Holdings