Blackstone seeks A$5.5 billion loan for AirTrunk acquisition, sources say

By Kane Wu, Scott Murdoch, Renju Jose

HONG KONG/SYDNEY (Reuters) -A Blackstone-led consortium is taking out an around $A5.5 billion ($3.7 billion) loan package to help fund the A$24 billion AirTrunk buyout, two sources with direct knowledge of the matter said, as the U.S. firm increases its Asian exposore.

Blackstone said on Wednesday it had partnered with Canadian Pension Plan Investment Board (CPP Investments) to buy AirTrunk, which is considered Asia Pacific's largest hyperscale data centres business.

Investors have flocked to the sector as artificial intelligence drives demand for capacity, and the financing package would be the second largest acquisiton loan in the region this year, according to Dealogic data.

It comprises a A$2 billion term loan and a A$3.5 billion revolving credit facility, according to the sources who could not be named discussing private information.

Blackstone declined to comment.

More than 10 banks are participating 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.

The financing would cover up to 50% of Blackstone's equity investment in the deal, said one of the sources, while the overall deal value includes AirTrunk's debt and its capital expenditure for committed projects.

HIGH PRICE

The consortium's purchase price would be over 20 times AirTrunk's projected earnings before interest, taxes, depreciation, and amortisation (EBITDA), the sources said.

The loan would seem highly leveraged in a typical buyout, but lenders are taking into account AirTrunk's estimated growth and cash flow in the next few years, based on its contracts, the sources said.

AirTrunk borrowed around A$4.6 billion from more than 30 lenders last year and that debt will be rolled over after the acquisition, the sources said.

AirTrunk's value 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.    

AirTrunk's founder and chief executive Robin Khuda will continue to lead the Sydney-based firm and keep an unspecified stake once the deal is finalised.  

Khuda, 45, who came to Australia from Bangladesh when he was 18 to do an accounting course at the University of Technology in Sydney, built the A$24 billion data centre business in less than a decade.      "Our journey has never been easy, we've faced so many adversities, and we always came out stronger and more resilient," Khuda said in a post on LinkedIn. He has admitted using retirement savings to save the business and contemplated bankruptcy.      "It was Christmas 2016 and I had to deliver our first data centre by September 2017 ... we got to the point where we had run out of money. I even took money from my superannuation fund so that was naughty of me," he told an Australian Financial Review Business Summit in March.      "I even rang up my lawyer and said I needed insolvency advice."      His LinkedIn profile lists his three-year stint at data centre operator NextDC as Deputy CEO and executive director but omits his CEO role at mobile payments firm Mint Wireless, which he quit after six months.

(Reporting by Kane Wu in Hong Kong, Scott Murdoch and Renju Jose in Sydney; additional reporting by Miho Uranaka in Tokyo; editing by Barbara Lewis)