A Blackstone-led consortium is raising a roughly $US5.5 billion ($3.7 billion) loan package to finance its $US24 billion acquisition of AirTrunk, according to two sources with direct knowledge of the matter.
Blackstone said on Wednesday that it has partnered with the Canadian Pension Plan Investment Board (CPP Investments) to buy AirTrunk, considered the largest hyperscale data center company in the Asia-Pacific region.
Investors have flocked to the sector as artificial intelligence drives demand for capacity, and the financing package would be the second-largest acquisition loan in the region this year, according to Dealogic data.
It includes a AUD 2 billion term loan and a AUD 3.5 billion revolving credit facility, according to the sources, who could not be named due to private information.
Blackstone declined to comment.
More than 10 banks are involved in the loan syndicate, including Credit Agricole, Deutsche Bank, Morgan Stanley and Japan’s MUFG, the sources said.
Credit Agricole, Deutsche Bank and MUFG declined to comment. Morgan Stanley did not respond to a Reuters request for comment.
The financing would cover up to 50% of Blackstone’s equity investment in the deal, one of the sources said, while the total value of the deal includes AirTrunk’s debt and its capital expenditures on committed projects.
HIGH PRICE
The consortium’s purchase price would be more than 20 times AirTrunk’s forecast earnings before interest, taxes, depreciation and amortization (EBITDA), the sources said.
The loan would appear highly leveraged in a typical acquisition, but lenders are taking into account AirTrunk’s estimated growth and cash flow over the next few years based on the contracts, the sources said.
AirTrunk took out a loan of around AUD 4.6 billion from more than 30 lenders last year, which will be extended after the acquisition.
AirTrunk’s value increased during the sales process, which officially began in March, due to the increasing use of AI, which requires greater data center capacity.
CPP Investments said in a statement Wednesday that it will own 12% of AirTrunk following completion of the transaction.
AirTrunk founder and CEO Robin Khuda will continue to lead the Sydney-based company and retain an undisclosed stake once the transaction is completed.
Khuda, 45, who came to Australia from Bangladesh at the age of 18 to study accounting at the University of Technology in Sydney, has built the $24 billion data centre company in less than a decade. “Our path has never been easy, we have faced so much adversity and have always emerged stronger and more resilient,” Khuda said in a post on LinkedIn. He has admitted that he used his retirement savings to save the company and that he considered bankruptcy. “It was Christmas 2016 and I had to deliver our first data centre by September 2017… we were at the point where we were running out of money. I even took money out of my superannuation fund, that was naughty of me,” he said at an Australian Financial Review business summit in March. “I even called my lawyer and said I needed bankruptcy counseling. His LinkedIn profile lists his three-year stint at data center operator NextDC as deputy CEO and executive director, but makes no mention of his role as CEO at mobile payments company Mint Wireless, which he left after six months.
