Cordiant Digital Infrastructure's discount could shrink as capital gets redeployed, Stifel says

Stifel maintains a 'positive' stance on Cordiant Digital Infrastructure (LSE:CORD), reiterating its belief that the company's shares, currently trading at a 27% discount to NAV, could see that gap narrow to under 20%. This outlook follows Cordiant's €20 million sale of a 10% stake in Datacenter United to a Cordiant-managed fund, a transaction Stifel views as providing crucial capital flexibility for future bolt-on acquisitions and potentially supporting further equity raises, despite its relatively small scale.

Analysis

Stifel has reaffirmed its 'positive' rating on Cordiant Digital Infrastructure Ltd (LSE:CORD), projecting a potential narrowing of the stock's discount to its net asset value (NAV) from the current 27% to below 20%. This outlook is supported by Cordiant's recent sale of a 10% stake in Datacenter United (DCU) for €20 million to another fund managed by Cordiant. While characterized as a small transaction, Stifel views it as a strategically significant move that enhances financial flexibility. The capital, freed up from a sale executed at the original 2024 purchase price, is expected to be redeployed into smaller bolt-on acquisitions, thereby sustaining the company's growth narrative. This capital recycling is also seen as a positive signal for Cordiant's ability to potentially tap equity markets in the future if required.

Key Decisions for Investors

• Investors may view the current 27% discount to NAV as a compelling entry point, given the analyst's expectation for the gap to close and management's proactive steps to unlock value.
• The primary catalyst to monitor is the deployment of the newly acquired €20 million into bolt-on acquisitions; successful execution will be key to validating Stifel's thesis.
• Consider that the transaction was an internal capital reallocation at cost, not a market-based sale, indicating the move is about strategic flexibility rather than immediate asset appreciation.