Merlin Properties expands capital to fund a bold data center program
Merlin Properties has formally launched a capital increase valued at nearly one billion euros, equivalent to 20 percent of its share capital. The money will fund its aggressive data center investment program. The operation will be carried out through cash contributions and will not grant a preemptive subscription right. However, the main shareholders of the Ibex-35 listed vehicle will participate and their stakes will not be diluted. Santander and Nortia Capital, holding company of Manuel Lao, hold 24.5 percent and 8.2 percent respectively, and will remain invested through the process.
Goldman Sachs and Morgan Stanley will act as coordinating and placing banks alongside Santander, Bank of America, Deutsche Bank and JP Morgan which will serve as joint coordinators. Additional banks like BBVA, Barclays, BNP Paribas, CaixaBank, Citi, Crédit Agricole, Société Générale, UBS and Van Lanschot Kempen will carry out placement duties as well. The accelerated book building process is expected to begin on Tuesday afternoon and could close by eight in the morning of the following Wednesday, July 24, with potential extension at Merlin’s discretion. This information is based on the issuer’s public disclosures and market filings cited in the period prior to the closing date.
In addition to Santander and Nortia, participants include Ismael Clemente, chief executive officer of Merlin, and Miguel Ollero, chief corporate officer, who hold 0.14 percent and 0.13 percent of the capital respectively. Both executive directors, besides the shareholders, will undertake a 90 day lock-up preventing share sales from the closing date of the increase for the period specified. This commitment aligns the management team with the equity holders during the capital raise and early phase of deployment.
The new shares issued through the capital increase will total a maximum of 93.95 million and will be admitted to trading on the Barcelona, Bilbao, Madrid and Valencia stock exchanges on the same day, July 24. They are expected to begin trading the following day, July 25, in Spain. The fundraising could bring in 965.84 million euros, though it is likely the final price will reflect a modest discount to the last quoted price, estimated near 10.28 euros per share based on the prevailing market dynamics at that time.
Funding the parent company rather than a stand‑alone vehicle
A notable point is that, pending final closing, Ismael Clemente and Merlin’s leadership team plan to secure the funds for the data center program through a capital increase at the parent company rather than via a separate subsidiary created solely for this purpose. Market chatter had suggested a parallel structure where a dedicated vehicle would aggregate all data centers and bring in a strategic partner to fund future builds, with each party taking a stake accordingly. In the latest guidance, the parent route will be used to maintain cohesion across the project and preserve direct governance over the strategic plan.
The funds raised will enable Merlin to proceed with a two‑phase investment program. The second phase envisions assets with a total capacity of 200 megawatts on land owned by the company and with all licenses in place and power available. This phase is expected to generate annual rents of about 313 million euros once fully operational. The first phase, aimed at constructing data centers with 60 megawatts of capacity, is projected to yield around 81 million euros in annual revenue in the medium term. The overall return on invested capital is anticipated to exceed the mid‑teens in percentage terms, reflecting a strong earnings profile for the project portfolio.
To date, the Ibex-35 listed REIT has invested nearly 300 million of the 565 million needed for the first phase and has earmarked only 7 million for the second phase so far. In the second half of this year, Merlin plans to invest about 74 million, with roughly 888 million slated for 2025, 961 million for 2026, 441 million for 2027, and 50 million for 2028, the year the program would reach its planned culmination. The objective remains to position Merlin as Europe’s leading publicly traded company focused on data centers. Management has highlighted the sector’s high capital intensity and technological barriers, noting the company’s capacity to develop and operate these assets as a core differentiator. According to Ismael Clemente, the firm’s outlook has been communicated in multiple investor discussions. This strategic emphasis reflects Merlin’s push to build a scalable, electricity‑efficient data center platform that can compete on a European level for returns and reliability. Source: issuer updates and investor communications cited in market disclosures.