Blackstone, Canadian Pension Plan Investment Board set to buy Macquarie’s AirTrunk

Blackstone and its partner are poised to buy Macquarie Group-backed AirTrunk in a blockbuster deal which ranks among the largest-ever acquisitions of an Australian company.

AirTrunk founder Robin Khuda, whose company is to be bought by a Blackstone-led group.

Private equity behemoth Blackstone and its Canadian partner look set to clinch AirTrunk in a blockbuster $23bn-plus deal that ranks among the largest-ever acquisitions of an Australian company.

The transaction, when consummated, will help New York-based asset manager Blackstone and the Canadian Pension Plan Investment Board (CPP) gain a stronghold in the rapidly expanding Asian and Australian data centre market. It will also mark a bumper payday for Macquarie Group, which owns the largest stake in AirTrunk.

Sources said a deal was set to be announced on Wednesday.

A spokesman for Macquarie and PSP Investments, which ­together own about 88 per cent of AirTrunk, declined to comment. Macquarie is thought to own about 60 per cent of the data centre group, while PSP holds about 28 per cent and AirTrunk founder Robin Khuda, 44, and staff the ­remainder. Macquarie’s shares gained 1.3 per cent to $219.81 on Tuesday as investors crunched the numbers on the potential proceeds that would be booked on AirTrunk in the second Macquarie Asia-Pacific Infrastructure Fund. A prior MST Marquee analyst ­estimate, at a lower valuation than $23bn, put the performance fee that Macquarie’s fund may earn at up to $1bn in the 2028 ­financial year.

The mooted AirTrunk deal will rank among Australia’s top five completed mergers and acquisitions behind deals such as the $32bn takeover – including debt and cash – of Sydney Airport three years ago, according to ­Dealogic data. Other transactions among the nation’s biggest include the takeover of shopping centre giant Westfield in 2017 by European group Unibail Rodamco, BHP’s sale of its petroleum business, and the acquisition of Newcrest Mining by US group Newmont.

Demand for data centres has swelled globally, but important questions are also being raised about their immense consumption of power.

There’s been a scramble to get a seat at the table as technology giants, investment houses and real estate groups look to increase their involvement in data centres.

Blackstone and CPP were thought to have muscled aside a consortium of five investment firms, including Global Infrastructure Partners, Silver Lake and IFM Investors to secure preferred bidder status, although bankers were not ruling out last-minute wrangling by the latter camp.

The prize in the AirTrunk bidding contest is its 11 data centres across the Asia-Pacific, including three in Sydney and one in Melbourne. The remaining seven data centres include one in Johor Bahru, Malaysia, three in Hong Kong, two in Tokyo and one in Singapore.

The sale marks a nine-year journey for former NextDC executive Robin Khuda, who cut his teeth under the stewardship of NextDC boss Craig Scroggie. Sources said the deal with Blackstone would include a retention mechanism for Mr Khuda and other key people at AirTrunk to ensure continuity and execution of the company’s plans following a change of control.

Blackstone has been active in the data centre sector. Earlier this year it snapped up the former Britishvolt industrial site in northeast England to advance plans to build large data centres. The project was reported as having earmarked investment of up to £10bn ($19.5bn) in the region. CPP has also shown interest. In 2021, the firm formed a joint venture with Japan’s Mitsui & Co for an investment fund with projects spanning hyper-scale data centres in Tokyo and Osaka.

After founding AirTrunk, Mr Khuda took an alternative route to his prior employer, building and developing data centres in the markets just outside of NextDC’s early reach across Asia, while Mr Scroggie took on the local market. AirTrunk has also been pushing further into Australia. Last week, the company said the third phase of a data centre in Sydney’s north was completed ahead of schedule. The expansion adds an additional 30 megawatts of “custom-built capacity” to the centre, which aims to have more than 120 megawatts of capacity.

In February this year AirTrunk opened its global headquarters in North Sydney alongside the likes of tech giants including SAP and Oracle. Mr Khuda said the location was strategic and that AirTrunk wanted to keep its roots in the city it was founded in.

“It’s fitting that Sydney is home to our new global headquarters; it is where AirTrunk was founded less than 10 years ago, is home to three campuses that make up the largest total capacity of any single city in our portfolio, and is where the majority of our employees reside,” he said.

“We established this new HQ, along with our regional head offices in Singapore and Japan, to accommodate our growing team of AirTrunkers who are enabling AirTrunk’s rapid expansion throughout the APJ region.”

To understand the scale of the lucrative returns Macquarie stands to make on AirTrunk, ­investors and analysts will be ­assessing its initial investment in the company, and additional funds tipped in for capital expenditure and expansion.

When the second Macquarie Asia-Pacific Infrastructure Fund invested in AirTrunk in 2020, the deal valued the developer and ­operator of data centres at $3bn.

The sale of the asset will be a coup for Macquarie’s Ani Satchcroft, who is a non-executive director on AirTrunk’s board and chaired the company from 2022 to 2023 ahead of an auction process being kicked off. She co-leads Macquarie’s infrastructure business in the Asia-Pacific.

Ms Satchcroft is joined on the board by Macquarie’s Verena Lim, who leads the group’s Asian operations. PSP is represented on AirTrunk’s board by Sandiren Curthan, global head of the firm’s infrastructure investments.