Megaport Limited is raising approximately A$827 million through a fully underwritten entitlement offer to finance four major AI contracts and build an on-demand GPU Pool, aiming to establish a globally-distributed AI inference cloud.
- Fully underwritten 1 for 3.08 entitlement offer at A$14.30 per share
- Raise of approximately A$827 million including A$309 million retail component
- Funds to support four AI contracts with combined A$459 million total contract value
- Creation of A$350 million on-demand GPU Pool for AI inference workloads
- Institutional offer sees 99% take-up, reflecting strong investor confidence
Ambitious Capital Raise to Fuel AI Infrastructure Growth
Megaport Limited (ASX:MP1) has kicked off a fully underwritten entitlement offer aiming to raise approximately A$827 million, with the retail component opening on 11 June 2026 and expected to close on 29 June. This follows a near-complete institutional offer that secured about A$518 million, reflecting robust support from institutional investors who took up 99% of their entitlements.
The offer price is set at A$14.30 per new share, representing a 10.9% discount to the theoretical ex-rights price and a 13.9% discount to the last closing price before the offer was announced. Eligible shareholders can subscribe for 1 new share for every 3.08 shares held as of 5 June 2026, with the option to apply for up to 50% additional shares subject to availability.
Backing Four Major AI Contracts and a GPU Pool
The capital raised will fund four recently secured AI infrastructure contracts with a combined total contract value of approximately A$459 million, all focused on supporting AI inference workloads. These contracts require around A$370 million in capital expenditure, primarily for high-performance NVIDIA GPUs, along with network and storage infrastructure.
Central to Megaport's strategy is the creation of an on-demand GPU Pool, backed by an investment of A$350 million. This pool will provide enterprise customers with rapid, flexible access to AI compute resources through both contracted and consumption-based models, addressing the growing demand for low-latency, globally distributed AI infrastructure.
Strong Financial Momentum and Strategic Positioning
Megaport’s Compute division has seen a pro forma annual recurring revenue (ARR) surge to A$385 million, a 6.4-fold increase since acquiring Latitude.sh. Combined with the Network division’s ARR of A$278 million, the group’s pro forma ARR reaches A$663 million. The Network division also reported a 25% year-on-year increase in ARR on a constant currency basis and improved net revenue retention to 113%.
FY26 revenue guidance has been tightened to a range of A$307 million to A$315 million, reflecting strong momentum. EBITDA and capital expenditure guidance remain unchanged.
Implications for Shareholders and Market Impact
The entitlement offer is non-renounceable, meaning shareholders who do not participate will see their holdings diluted. However, those who fully subscribe and apply for additional shares under the Top Up Facility could increase their ownership stake.
New shares issued will rank equally with existing shares and are expected to commence trading in early July 2026. The offer is fully underwritten by Merrill Lynch Equities and UBS Securities, providing certainty of capital raising success.
Megaport’s CEO Michael Reid emphasised the company’s position at the forefront of AI infrastructure, stating, “AI inference is becoming a global infrastructure challenge, not simply a GPU problem. Megaport is built to deliver it all.”
Tax Considerations and Legal Framework
The retail offer booklet outlines general Australian tax implications for eligible retail shareholders, including no immediate tax liability upon issuance of entitlements and standard capital gains tax treatment upon disposal of new shares. The company cautions that proposed changes to CGT rules may affect future tax outcomes.
Megaport has also highlighted the legal restrictions on the offer, excluding US investors and others in jurisdictions where the offer is not lawful. The offer booklet advises shareholders to seek independent financial and tax advice before participating.
Bottom Line?
Megaport’s hefty entitlement offer underscores its aggressive push into AI infrastructure, but investors should watch how the GPU Pool deployment and contract execution unfold amid evolving market dynamics.
Questions in the middle?
- Will retail shareholders match the near-total take-up seen in the institutional offer?
- How quickly will the GPU Pool reach optimal utilisation and contribute to cash flow?
- What impact will proposed CGT rule changes have on long-term shareholder returns?