Why Bevan Slattery's Superloop keeps winning fans in the Australian market

Photo: Harold Cunningham/ Getty Images.

The Bevan Slattery “fan club” has just had another big-name institution enter its lounge.

RBC Capital Markets this morning called out Slattery’s network infrastructure company Superloop [ASX:SLC] with an “outperform” recommendation — predicting its stock would rise from yesterday’s closing price of $2.97 to $5.00.

Bevan Slattery Source: subpartners.net

Superloop last week raised $65 million in just one hour and then shelled out $205 million for a takeover of fixed wireless provider BigAir.

“We see SLC as a compelling investment opportunity. We start our coverage with a ‘speculative risk’ qualifier due to the early stage and low-present-earnings nature of SLC — however, we see great potential for SLC to grow earnings at a rapid rate,” RBC said in a note to clients.

RBC Capital Markets singled out Superloop’s dark fibre business as a differentiator.

The company operates dark fibre — the “pipes” that privately connect data centres without the provider adding any other services — in Australia and Singapore, with a Hong Kong network currently under development.

“Its strategy is to connect data centres and submarine cable-landing stations with key CBD office buildings via the shortest, lowest latency path. This differentiates it from incumbent telcos whose networks are designed around mobile/broadband products,” said RBC Capital Markets.

Morgans and Macquarie Capital closed the $65 million capital raising after just one hour last Tuesday night, according to the AFR.

The investor loyalty was perhaps unsurprising: Superloop has tripled shareholders’ money in the 15 months it has been listed on the ASX.

Serial entrepreneur Slattery previously launched Pipe Networks and data centre provider NextDC in the past. Morgans has invested with his ventures from the start, according to Fairfax Media.

Superloop was formed in late 2014 after Megaport divested out its physical assets. Megaport is now a purely software-defined bandwidth provider that allows customers to dial up and down capacity on demand.

RBC pointed to Slattery’s similar experience with Pipe Networks, another dark fibre provider that multiplied its share price 15-fold between 2005 and 2010, and said the BigAir acquisition makes strategic sense.

“SLC represents an opportunity to back management to succeed again, but in more lucrative markets with market structures similar to Australia in 2005. A backdrop of significantly higher data consumption and a migration towards cloud computing provide additional tailwinds,” read RBC’s statement.

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