Cordiant Digital Infrastructure: Backbone of the Digital Age

The strongest growth driver is data centres, where demand is outrunning supply. They account for only about 14% of revenue today, but that contribution is set to grow sharply. Cordiant's flagship Prague Gateway project is being built to the AI-ready standards modern computing needs, with capacity of 26MW. A New York interconnection site, a Belgian data-centre platform, and Emitel’s recent data centre bolt-on acquisition add further room to expand. As power, water and well-connected land become the real bottlenecks for AI, owning sites that already have both becomes increasingly valuable, particularly in growth markets.

The assets behave like toll booths on data traffic. Broadcasters, mobile networks and cloud firms sign long, recurring contracts to use the towers, fibre and data halls, and roughly two-thirds of revenue rises automatically with inflation, protecting its real value. Contracted revenue stands at about £952m, with some agreements running to 2044. The pay-off is dependable cash: the 4.45p dividend is covered 1.7 times by the cash the business generates after costs, so there is a comfortable buffer before payouts are at risk.

The manager earns its fees, which are based on market capitalisation not NAV, by improving and growing assets, not just holding them. It buys mid-sized platforms at sensible prices, then adds value by filling spare capacity, winning new contracts and bolting on smaller businesses. This approach has grown net asset value by about 14% a year since listing in 2021, comfortably ahead of the 9% target, helped by ten smaller acquisitions plus construction of new towers, data centres and fibre networks. A tower or data centre costs much the same to run whether it is half-full or full, so each new customer adds revenue at little extra cost, and most of that flows through to profit, helping fund a rising dividend.

As an investment trust, Cordiant can also borrow to invest, which magnifies returns when assets perform (and losses if they don't). Borrowing currently sits at about 40% of the value of its assets, within the company's self-imposed 50% limit, leaving headroom to keep funding growth.

• Prague Gateway anchor tenant: Cordiant is seeking a first major customer for its flagship data centre, now under construction. Securing one would prove out the asset’s growth story and support the project's valuation.
  

• FTSE 250 effect: As a new index member, Cordiant should draw passive buying and wider coverage, helping close the gap between share price and net asset value.

• New capacity filling up: First phases at Prague Gateway going live, plus higher usage at the New York and Belgian data centres, would add incremental earnings.
  

• More deals and contract wins: Continued small acquisitions, mobile-tower building and public-sector contracts should keep profits growing.

• Scaling the data centre business: Expanding Prague Gateway, winning EU AI-related backing, and continuing to establish CRA and Emitel’s presence in their domestic data centre markets could step-change the asset base as European data-centre demand grows.
  

• Funding the pipeline: Deploying into an active pipeline through debt, recycling capital or co-investment, would grow the earnings base, and if the discount narrows at the same time, the shares could rise faster than the assets themselves.

Cordiant’s ability to fund further acquisitions and portfolio expansion may be constrained if its shares continue to trade at a discount to NAV or investment trust equity markets remain challenging. This has been a frustration for the investment management team and Board, as it could limit the pace at which it executes its strategy and pursues more growth opportunities.

Revenues come in Polish zloty, Czech koruna, euros and US dollars, so exchange-rate moves swing the returns reported in pounds. Of the 16.3% total return on net asset value in the year to March 2026, around 4 percentage points came from currency alone. Asset values are based on projected future cash flows, which are sensitive to interest rates, and with borrowing at roughly 40% of asset value, higher rates also raise financing costs. A stronger pound or higher-for-longer rates would work against both asset values and earnings.

Two assets, Emitel in Poland and CRA in the Czech Republic, make up a large part of portfolio value, so a stumble at either could have a significant impact. Management has also flagged customer churn in the cloud division, and because large projects come on stream in stages, growth can look uneven from year to year. Blue-chip, contracted customers reduce the danger, but the concentration and near-term churn remain real features of the current portfolio rather than abstract risks.