Digital infrastructure investor Digital 9 Infrastructure (DG19) slumped 40% as disappointing first-half results (28 September), showing an 8.8% drop in net asset value (NAV), and the suspension of the dividend sent investors heading for the exits.This extended 12-month losses to more than 60% with the suspension of the payout described as a ‘screeching U-turn’ by Investec given the board had reconfirmed the 6p per share full year target as recently as July. Rising borrowing costs, the inability to raise fresh equity and the need to fund its growth capital expenditure pipeline have reduced the actual cash available for distribution.

The timing and value of the potential syndication of a majority stake in Verne Global, arguably the trust’s highest growth asset for which multiple bids at or around NAV have been received, remains outside of management’s control. This is worrying investors since the company’s position as a going concern relies upon the transaction concluding successfully.

Now languishing on a massive 62% discount to NAV, D9 will begin a strategic review and given the dramatic share price plunge, Stifel thinks the fund is now a live target for an acquirer.

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