Ladies and gentlemen, thank you for standing by. My name is Krista and I will be your conference operator today. At this time, I would like to welcome everyone to the Tasmea Limited acquisition of Maxim Group presentation. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. If you would like to ask a question over the web, please type your question in the questions box and press enter to submit. Thank you. I would now like to turn the conference over to Stephen Young, Managing Director. Please go ahead.
Good morning, everyone. Today, arguably the most exciting day for Tasmea since our IPO. Thank you for joining us at short notice. This morning, Tasmea has announced the acquisition of the Maxim Group, a Victorian-based market leading specialist electrical contractor. Our presentation pack is available on our website, and following this webinar, the recording will also be available online. With me today, I have Mark Vartuli, our Chief Executive Officer, along with Jason Pryde and Trent Northover, both Executive Directors and our Chief Operating Officers. The acquisition of Maxim Group is a significant step in Tasmea's programmatic growth strategy and establishes Tasmea as a leading national specialist electrical provider exposed to the highest growth market in the Australian economy. Yesterday, the Australian Financial Review referred to data center construction as the next mining investment boom.
Maxim is a high-quality, owner-led business with deep customer relationships and a multi-year visible pipeline of more than AUD 1.3 billion. Maxim has strong electrical credentials in data center projects and one of Victoria's largest rail inducted specialist electrical workforces. Combining Maxim with Tasmea, the Tasmea Group is now forecast to deliver approximately AUD 100 million per annum of electrical EBIT.
Really importantly, the acquisition is 31% pro forma earnings per share accretive. Critically, the acquisition preserves the owner-led model that is built by Tasmea and Maxim. Maxim's leadership team is staying with the business, taking equity in Tasmea, and is incentivized through a three-year earn-out linked to the delivery of AUD 50 million of maintainable EBIT per annum. We are delighted to welcome the Maxim team to Tasmea and look forward to supporting their continued growth through our corporate services platform and broader specialist trades capability.
There are a number of transaction highlights that I would like to draw to your attention. The business will be highly specified. I should say, these slides have been presented, I believe, as I speak. We are highly specialized and diversified. Maxim is one of the three large electrical providers to data centers throughout Australia. Maxim is owner-led and are taking, as part of this transaction, 12 million shares in Tasmea. They've got an exceptionally high growth market outlook. Importantly, they've got a long-term contracted pipeline, which we have visibility of. I mentioned in my opening comments, 31% earnings per share accretive. We're highly confident that they'll blow the AUD 50 million EBIT necessary to earn out the acquisition price. The transaction itself, really importantly, fully funded out of our cash and our banking facilities.
Post-acquisition, I should say that's another way of me saying we do not intend to raise any further capital for this transaction. The net leverage post-acquisition is under our target of one times at 0.8. Importantly, once we've completed this transaction, we'll have the largest listed electrical business in Australia. Maybe just a couple of really high-level comments about what attracted us to Maxim. First of all, their compound aggregate growth rate, 2024 to 2026, 70%. They make a shitload of EBIT, AUD 50 million. They've been running for 30 years. They've got a great team. They've got 600 skilled full-time employees. When adding apprentices and contractors, 900. As I said earlier, we've got visibility of the next few years. If I turn to the next page, our core competitive advantages, just touch on them high level.
They've got entrenched data center relationships as a result of work that they've already done and completed successfully. They've got a large infrastructure business and they've got one of the largest rail inducted workforces in Victoria, and many of you will be aware of the commitment that the Victorian Government has made to expanding their rail network and the tunnels necessary to facilitate that network. They are owner-led, and they've got a great management team. They are exposed to growing end markets. No hotter market in Australia than data centers.
They've got a delivery track record of doing large projects. They know how to work at scale. They've got a breadth of capability. Interesting enough, bringing their team of electricians onto our team nearly doubles the number of electricians Tasmea employs. They've got a strong and improving financial track record. If we have a look at where they're going, it's entirely consistent with their growth over the last couple of years. Because of their size, because of their skill, because of the ability to do large projects, they're differentiated from many of their Victorian peers, and we're very proud to have them joining our team. Let me hand over to Mark, our Chief Executive.
Thanks, Stephen. Just to touch on a couple of the transaction overview summary in key terms. We're paying essentially AUD 254 million at EV on a cash and debt-free basis. AUD 184 million of that is upfront and AUD 70 million is earn out over a three-year period. Of the upfront consideration, AUD 112 million is in cash, but net cash, or net debt as a consequence of the transaction will be circa low AUD 80 million.
AUD 72 million in scrip. That's 12 million new TEA shares issued at AUD 6, which will all go into our free float and count towards the indexation indices. There'll be three cash earn out payments of up to AUD 23.33 million, which is AUD 70 million in total for each of the year ended 30 June 2027, 2028, and 2029 on the Maxim Group achieving an EBIT of at least AUD 50 million. There will be a reduction if there is a shortfall, we currently have no intention in exercising any of those aspects.
There is a catch-up payment in the event they achieve AUD 150 million over the three years, on a cumulative basis, they'll be entitled to the full AUD 70 million in earn out payments should they have not achieved their full entitlement in each of the years. We're targeting a settlement for 1 July 2026, so we can have their earnings in next year on a full basis. However, it's customary conditions precedents will need to be achieved, and specifically ACCC approval will be required under the new mandatory merger control regime. As I mentioned previously, post transaction on a last 12 months trading basis, our net debt to pro forma FY 2026 EBITDA will be circa 0.75x to 0.8x .
Well within Tasmea's target range. If I turn over the page, in relation to the pro forma FY 2026 EBIT, we had a pro forma AUD 128 million before the transaction. With the Maxim Group, that would've been AUD 175 million for FY 2026, and on an NPAT basis, AUD 78 million will step up to AUD 107 million had we owned the Maxim Group for the last 12 months ended 30 June 2026. I've spoken about our gearing, which is circa just under 0.8 x, and most importantly, an exciting transaction that is 31% earnings per share accretive for our shareholders. I'll hand over to Jason now.
Thanks, Mark. The Maxim Group gives us the opportunity for expansion into Victoria. They're strategically positioned to capitalize on all the major data center base and infrastructure investment programs. We expect to leverage this footprint to expand our specialist services into Victoria, which we're currently underrepresented in that state. In addition to this, Maxim's core clients have a national operating footprint with New South Wales, WA, and South Australia representing further growth opportunities for both Maxim and our specialist trade skilled subsidiaries. I'll now hand over to Trent Northover.
Thanks, Jason. Slide eight please, operator. The next two slides I'll talk about are really around the demand and supply aspect. As Stephen's touched on this morning, the Australian data center demand is accelerating quite rapidly. This is driven by the hyperscalers in the U.S. and the AI workloads, with market demand expected to grow approximately from 1.5 GW, as you can see on the screen, in 2025, up to 4 GW by 2030. This represents a 21% compound growth rate. We see this as a structural shift rather than a short-term demand spike. What you'll see on the right-hand side of this page is supply is not keeping up with the demand. By 2026, the available market capacity as it stands is forecast around 1.7 GW and against a demand of about 1.9 GW.
This creates an immediate 200 MW capacity shortfall. This highlights too, Tasmea, the urgency for new data center developments. Over to slide nine please, operator. As we look at the supply side of the curve, Australian operational data center capacity is forecast to grow. Again, as you can see on the left-hand side, from 1.4 GW last year up to 3.2 GW by 2030. This is representing 128% growth over that period. Sydney, you'll see highlighted in blue, remains the dominant market, which is expected to reach 2 GW by 2030, while Melbourne grows, which is the green, strongly to 1.1 GW, about 22% compound growth rate, which is about a third of the national capacity.
This growth rate's being driven rapidly by increasing electricity demand, as we've touched on for data centers, and the expectation is consumption and forecast will triple by 2030. What does this mean for Tasmea? This is the sustained investment in digital infrastructure creates significant pipeline of opportunities across our specialist electrical services portfolio. Over to Stephen.
Let me just move to a conclusion before opening up to questions. We'll talk firstly about our strategic rationale. You should not be surprised to see Tasmea entering the data center market. We're strong believers in a rising tide floats all boats, and you'll see us, as we've done over the life of Tasmea, step from one strong industry into another. We're very excited to be a participant in the data center industry, and we're also excited about being part of rail development in Victoria, which has got a decade to run. Importantly, it gives us further diversity, both geographically and from an industry perspective. Talking just about Maxim, it is a market-leading electrical specialist. Operator, can we move to page 10? We're a highly skilled and scalable workforce.
The capabilities they've got and the capability we've got is complementary. They've got an established track record of delivering. Important, the only thing their customers want them to do is to go faster. Data centers, the strongest industry in Australia. The construction of data centers is the strongest sector of the Australian economy currently. They've got established major infrastructure capability and battery energy storage systems and renewables is a third significant part of their capability and their ability to enter those rapidly growing sectors.
Worthwhile me just mentioning briefly, we shared with you a couple of years ago when talking about electrification some slides about the demand between now and 2050. That information is now outdated. No one can kind of work out quite how outdated it is. The rapid growth of data centers is once again changing and improving or increasing Australia's need for electrification.
Owner-led, Paul Murray, Kevin Thompson, Steve Driver, both outstanding. Steve Driver, sorry. Outstanding executives. We look forward to them leading their teams and us working alongside them. We've got very high visibility of the work that is coming towards Maxim, and we're very confident of their ability to deliver the earnings per share accretive 30%, 31% that we've shared with you.
Finally, with our foot in the Victorian market, where previously we haven't been established, we expect to be able to grow with Maxim across other Tasmea subsidiaries. Really importantly, Maxim is very Victoria-centric. Over the years to come, we will grow with Maxim in other regions. We see great synergies as we move forward. Now to close, Maxim is a significant acquisition for Tasmea. As mentioned in the text to me earlier today, this looks like a ripper, and I assure you it will be.
We expect it to deliver 31% earnings per share accretion. It positions Tasmea as the leading national specialist electrical provider with direct exposure to data center, battery storage, and major infrastructure markets. Importantly, it preserves the owner-led model that has built both Tasmea and Maxim and leaves Tasmea's balance sheet with capacity for further programmatic acquisition growth. We look forward to welcoming Maxim team into the Tasmea Group. Thank you for your time today. I'll now hand over to the operator to handle questions that you may have. Back to you, operator.
Thank you. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. And if you would like to withdraw your question, again, press star one. If you would like to ask a question over the web, please type your question in the question box and press enter to submit. Your first question comes from Megan Kirby- Lewis with Barrenjoey. Please go ahead.
Good morning, guys. I'm just keen to understand the breakdown of the business a little bit more, just in terms of how much is data center versus BESS versus the rail work.
It's roughly about 55%-45%, and we have forecasting for that to stay in roughly around that range, moving up or down a few percent given both.
Okay, the 45% includes BESS and rail?
Yes.
Okay. Just as a follow on just on sort of the contracting model, appreciate the slides say that it preserves that low-risk contracting model. Again, just keen to get a bit of detail on how the contracts are actually structured across each of those three buckets of work.
Megan, in relation to the infrastructure work, it's pretty well done under a contract, but it's done based on a budget estimate or a TOC and they use schedule of rates to undertake the work. In relation to the data center work, essentially it's done under a master contract with POs issued for all of the scopes of work.
Great. Thanks. I'll pass it on and jump back in the queue.
Thanks, Megan.
Your next question comes from the line of Lachlan Woods with CGS. Please go ahead.
Hi, guys. How are you going?
Good.
Can you just explain to me, the AUD 47 million of EBIT, my understanding is there's quite a strong second half skew, just given they have won some DC work recently in Victoria. Can you just talk us through that and then how you're kind of thinking through their exit EBIT run rate? I'd assume it's quite a lot stronger than the AUD 47 million.
It is a bit stronger than the AUD 47. We've set our agreement on AUD 50 million EBIT, and we're highly confident that based on their pipeline of secured work, that they will deliver their AUD 50 million.
Perfect. I know Megan went through the revenue breakdown, but can you also just talk us through the pipeline? In the data center space, I guess, how many key customers are there? Is it just the one customer, or do they have a few customers that they're working for?
Maybe I might just deal with that. You're most probably aware that one of the features of our communication with our shareholders is we're reasonably private about who our customers are, when they award us work, and the value of that work. You would have seen other firms sharing with the market the amount of work they've got in hand and keeping that information up to date.
We keep that information confidential because it is highly competitive. To give you a really good segue into the way we behave and think, our auditors get to see the front page and last page of our master services agreements. We don't share with them the length of the agreement, but they just know that we've got it, don't share the rates. We really try very hard to keep the information, which is confidential and really of great interest to our customers, confidential.
Understood.
Great interest to our competitors as well.
Thanks, guys.
The data center industry is very guarded about sharing what they're doing and when they're going to do it.
Maybe I can make one further comment around that. There is only a defined amount of people who have the capability and the demonstrated track record to deliver data center projects. If someone works for another customer and then they switch, ultimately all you're doing is moving around which data center owner you're going to work for ultimately, because there is just not the amount of electricians required to deliver the demand.
Thank you. That concludes our question and answer session. I would now like to turn the conference back over to Stephen Young for closing comments.
Thank you very much for attending everyone this morning. We hope you all have a great day. Thanks for your time. Goodbye.
Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.