Blackstone to buy Australia's AirTrunk in $16 billion deal

By Scott Murdoch

SYDNEY (Reuters) - Blackstone will buy Australian data centre group AirTrunk for an implied enterprise value of over A$24 billion ($16.10 billion), it said on Wednesday, in what would be Blackstone's largest investment in the Asia Pacific region.

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

The deal is the biggest leveraged buyout of the year so far and comes at a time when private equity-led dealmaking is starting to bounce back after a spike in financing costs in 2022 and 2023 made financing buyouts more expensive and big deals hard to clinch.

Global leveraged-buyout volumes jumped 41% to $286 billion during the first half of 2024, according to Dealogic.

The transaction for AirTrunk needs approval from the Australian Foreign Investment Review Board (FIRB), given the asset is being bought by overseas parties.

At $16.1 billion, the deal is the largest buyout in Australia this year and one of the biggest in recent history.

Global private equity investors and asset managers are readying for billions of dollars worth of M&A and investments linked to data centres in Asia Pacific, as the artificial intelligence (AI) boom fuels demand for digital infrastructure.

The value of AirTrunk increased during the sales process, which officially began in March, due to the increasing usage of AI which requires greater data centre capacity.

CPP Investments said in a statement on Wednesday it would hold 12% of AirTrunk once the deal was finalised.

"CPP Investments has invested in the Asia Pacific data centre sector for several years, and we have witnessed significant growth in this space, fuelled by a strong demand for digital infrastructure and, more recently, the increasing adoption of artificial intelligence," said Max Biagosch, CPP Investments' global head of real assets.

AirTrunk, which was founded in Sydney in 2015, is considered the largest data centre group in Asia Pacific, with 11 sites in Australia, Japan, Malaysia, Hong Kong and Singapore.

It was owned 88% by MAM and Canada's PSP which have now sold their entire stake, according to a statement from the two companies.

AirTrunk founder and chief executive Robin Khuda will retain a stake, the statement said, without specifying the size of his remaining shareholding. Khuda will remain chief executive, according to the statement.

"AirTrunk is another vital step as Blackstone seeks to be the leading digital infrastructure investor in the world across the ecosystem, including data centers, power and related services," Blackstone president Jon Gray said in a statement.

Blackstone and CPP Investments beat out a consortium led by IFM Investors which also bid for AirTrunk, Reuters reported on Aug. 28.

Reuters reported on Monday the Blackstone-led group was nearing a deal to win control of AirTrunk.

($1 = 1.4908 Australian dollars)

(Reporting by Scott Murdoch in Sydney; Additional reporting Echha Jain in Bengaluru; Editing by Louise Heavens, Mark Potter and Marguerita Choy)