Blackstone Acquires AirTrunk for A$24 Billion

By Scott Murdoch

SYDNEY (Reuters) – Blackstone (NYSE:BX) will buy Australian data centre group AirTrunk for an implied enterprise value of over A$24 billion ($16.10 billion), it said on Wednesday, marking its largest investment in the Asia Pacific region.

The alternative asset manager, alongside the Canada Pension Plan Investment Board (CPP Investments), is acquiring AirTrunk from Macquarie Asset Management (MAM) and the Public Sector Pension Investment Board (PSP).

This deal is the biggest leveraged buyout of 2024 thus far and arrives as private equity deal-making starts to recover following increased financing costs in 2022 and 2023, which complicated large buyouts.

Global leveraged-buyout volumes increased by 41%, reaching $286 billion in the first half of 2024, according to Dealogic.

The AirTrunk transaction awaits approval from the Australian Foreign Investment Review Board (FIRB) because overseas parties are involved.

At $16.1 billion, this buyout is the most significant in Australia this year and among the largest historically.

Private equity investors are preparing for substantial M&A and investments in Asia Pacific’s data centre sector, driven by a surge in demand due to the artificial intelligence (AI) boom requiring enhanced digital infrastructure.

The value of AirTrunk appreciated during the sales process, which began in March, reflecting increased AI usage and the corresponding need for more data centre capacity.

CPP Investments stated that it would hold 12% of AirTrunk once the deal is finalized. Insiders have noted the growth in the Asia Pacific data centre market, supported by high demand for digital infrastructure and the rapidly growing adoption of AI, as noted by Max Biagosch, CPP Investments’ global head of real assets.

Founded in Sydney in 2015, AirTrunk is the largest data centre group in Asia Pacific, operating 11 sites across Australia, Japan, Malaysia, Hong Kong, and Singapore. Previously, MAM and PSP owned 88% of the company, which they have now fully divested.

Robin Khuda, AirTrunk founder and CEO, will maintain a stakeholder position and continue as chief executive. Blackstone’s president Jon Gray stated that acquiring AirTrunk is key to enhancing Blackstone’s position as a leading digital infrastructure investor globally, comprising data centers, power, and related services.

The Blackstone and CPP Investments partnership surpassed a competing bid from a consortium led by IFM Investors, as reported on August 28. On Monday, Reuters indicated that the Blackstone-led group was nearing a deal to assume control of AirTrunk.

(Note: $1 = 1.4908 Australian dollars)