Blackstone Consortium Secures Loan for A$24 Billion AirTrunk Buyout

By Kane Wu, Scott Murdoch, Renju Jose
HONG KONG/SYDNEY (Reuters) – A Blackstone-led consortium is securing an A$5.5 billion (about $3.7 billion) loan to fund the A$24 billion acquisition of AirTrunk, enhancing its presence in Asia.

Blackstone (NYSE:BX) announced on Wednesday its partnership with the Canadian Pension Plan Investment Board (CPP Investments) to acquire AirTrunk, recognized as the largest hyperscale data center business in the Asia Pacific.

As demand for data capacity soars with the rise of artificial intelligence, investors have shown significant interest in this sector. This financing package stands to be the second-largest acquisition loan in the region this year, according to Dealogic data.

The package includes a A$2 billion term loan and a A$3.5 billion revolving credit facility, as per sources who remained anonymous due to the nature of the information.

More than 10 banks are involved in the loan syndicate, featuring institutions such as Credit Agricole, Deutsche Bank, Morgan Stanley, and MUFG from Japan. While Credit Agricole, Deutsche Bank, and MUFG declined to comment, Morgan Stanley did not respond to Reuters’ inquiries.

The financing is expected to cover up to 50% of Blackstone’s equity investment in the deal, which factors in AirTrunk’s existing debt and its capital expenditures for projects in progress.

HIGH PRICE

Reports indicate that the consortium’s purchase price will amount to more than 20 times AirTrunk’s projected EBITDA. While the loan is deemed highly leveraged in typical buyouts, lenders are optimistic about AirTrunk’s expected growth and cash flow based on existing contracts.

AirTrunk borrowed approximately A$4.6 billion from over 30 lenders last year, which will be rolled over post-acquisition. Notably, AirTrunk’s valuation increased during the sales process that started in March due to higher demand for data center capacity stemming from AI usage.

CPP Investments has mentioned that it will hold 12% of AirTrunk post-deal finalization. AirTrunk’s founder and CEO, Robin Khuda, is set to continue leading the Sydney-based firm while maintaining an undisclosed stake in the company.

Khuda, who migrated to Australia from Bangladesh at 18 years of age to pursue an accounting degree, built the A$24 billion data center venture in under a decade. In a LinkedIn post, he shared, “Our journey has never been easy; we’ve faced so many adversities, and we always came out stronger and more resilient.” Khuda revealed that he had utilized retirement savings to rescue the business during difficult times and even contemplated bankruptcy.

“Christmas 2016 was a tough time; I had to deliver our first data center by September 2017, and I ran out of money, resorting to my superannuation fund, which I found to be a naughty decision,” he remarked during an Australian Financial Review Business Summit in March. His LinkedIn profile notes his previous role as Deputy CEO and executive director at NextDC but omits his short tenure as CEO at the mobile payments firm Mint Wireless.