Blackstone taps two banks in quest for AirTrunk

The $5bn data centre owner AirTrunk is up for sale through investment banks Goldman Sachs and Macquarie Capital. Picture: iStock

New York-based private equity firm Blackstone is believed to be appointing two investment banks to work on the potential acquisition of the data centre giant Airtrunk.

Sources believe that Morgan Stanley is one of the banks either on the ticket or in the box seat to land the mandate.

The sale process is now expected to start in a few weeks after the timeline was initially pushed back and flyers or any other sort of promotional material is yet to be sent out to the market.

AirTrunk, partly owned by Macquarie Group, is so far is thought to be worth about $5bn, and it’s a big cheque for any suitor.

Blackstone has been considered as the favourite to buy the asset for months – openly flagging its interest in data centres – and is likely to be one of the few that can handle such a large price tag.

Yet another possibility is that consortiums form to take on the private equity heavyweight, consisting of super funds like IFM and AustralianSuper or others like Canadian funds offshore.

The theory around the market had been that perhaps Blackstone took on a bench of banks to take advisers out of the market for other rivals, although sources say that the firm has settled with two.

Working on the sale are Goldman Sachs and Macquarie Group’s advisory arm, Macquarie Capital.

Another option is that Macquarie sells a smaller holding of the asset, which would attract more bidding tension.

AirTrunk is owned by Macquarie Asset Management, PSP and the owner and founder ex-Next DC executive Robin Khuda.

It is considered the best-in-class hyperscale data centre platforms for large cloud, content and enterprise customers across the Asia-Pacific, launching its first hyperscale data centre in western Sydney.

It operates in Japan, Malaysia, Hong Kong, Australia and Singapore.

The situation is similar to the sale process last year of Ticketek owner TEG Group where Blackstone was clearly labelled early on as the party to beat for the sale process, flagging entertainment assets were one of its key areas of investment.

It hired Goldman Sachs to buy the business, but in the end, it walked away, when vendor Silver Lake was said to be insisting on a price close to $3bn rather than $2bn that some earlier expected.

Blackstone is the world’s largest alternative asset manager with $US1 trillion in assets under management, with about 12,500 real estate assets and at least 230 portfolio companies.

Its Australia and New Zealand outpost is run by Senior Managing Director Michael Blickstead.

Mr Blickstead was on a panel of experts speaking last week at the AVCJ Private Equity Forum in New Zealand about portfolio management and how to adapt to the environment with higher interest rates, inflation and reduced consumer spending.

Mr Blickstead said most funds were buying assets at higher valuations in 2021 and 2022, so it could take funds longer to get to their targeted returns.

“Multiples are no longer there, and you need to drive the value add,” he said.

“We have the benefit of taking longer and sometimes take investment decisions that are not in the best interest of short term profitability but in long term profitability.

“If that sometimes takes longer, that’s fine, but we have to make sure the returns still make sense.”