Blackstone and the Canada Pension Plan Investment Board have won the hotly contested race to acquire Australian data centre business AirTrunk in a deal that values the asset at more than A$24 billion ($16.1 billion; €14.6 billion).

The two parties will acquire the 88 percent stake in AirTrunk owned by Macquarie Asset Management and PSP Investments. AirTrunk founder and CEO Robin Khuda is also selling down part of his stake on top of this, but will retain a minority interest and remain as CEO.

Blackstone’s funds will take out most of the equity, although the exact size of its final managed stake is unknown, while CPP Investments will acquire a 12 percent stake.

AirTrunk was founded in 2015 and focuses on building and operating hyperscale data centres. It owns 11 data centres with a committed capacity of 800MW across Asia-Pacific, including five in Australia. It also owns and operates sites in Japan, Singapore, Hong Kong and Malaysia, and has a pipeline to grow to 1.8GW.

Unusually, Blackstone will commit equity from four separate strategies across asset classes to the deal, namely real estate, infrastructure, tactical opportunities and private equity for individual investors. The deal is its single biggest investment to date in the Asia-Pacific region. Blackstone declined to disclose how it would split its equity between the various strategies.

A source familiar with Blackstone’s bid cited this as part of the reason they were successful, as by drawing on multiple strategies they were able to account for most of the equity on their own, making governance and decision making theoretically more straightforward.

CPP Investments also deployed both its infrastructure and real estate teams to underwrite the deal.

Blackstone and CPP Investments pipped another five-way consortium to the post, which consisted of several sector heavyweights including IFM Investors, DigitalBridge, Global Infrastructure Partners, Abu Dhabi investor MGX and Silver Lake.

Infrastructure Investor understands that many of the bidders – including IFM, DigitalBridge and GIP, as well as eventual winners Blackstone and CPP Investments – were initially considering making individual bids for AirTrunk. As the valuation spiralled upwards over the last 12 months, however, the bidders came together to form two rival consortiums.

One source said the two bidders were relatively close on the final value of their offers.

Paying top dollar

Infrastructure Investor understands that the equity cheque is between A$10 billion and A$15 billion, which is around the ballpark initial valuation for AirTrunk that was being shopped around a year ago, demonstrating how rapidly its growth forecasts have increased thanks to the artificial intelligence boom. AirTrunk is especially well-positioned to take advantage of this given its sole focus on building and operating hyperscale data centres.

MAM held part of its stake in AirTrunk in Macquarie Asia Infrastructure Fund II, which closed on $3.3 billion in 2018, as well as managing a portion on behalf of investor partners. The deal represents an enormously successful exit for the fund, as well as MAM’s other investors and PSP, after having bought in at a valuation of around A$3 billion in 2020.

The deal is subject to approval from Australia’s Foreign Investment Review Board.

In a statement, Blackstone president and COO Jon Gray said: “This is Blackstone at its best – leveraging our global platform to capitalise on our highest conviction theme. AirTrunk is another vital step as Blackstone seeks to be the leading digital infrastructure investor in the world across the ecosystem, including data centres, power and related services.”

Ani Satchcroft, co-head of infrastructure for Asia-Pacific at MAM, said in a separate statement: “The AirTrunk story is one of genuine partnership between MAM, PSP Investments and AirTrunk’s world-class team. Our journey with AirTrunk, and the drive and foresight of our teams in Asia-Pacific, has resulted in AirTrunk expanding its footprint across key markets in the region, achieving a more than eightfold increase in contracted capacity.

“Today’s transaction demonstrates MAM’s ability to identify, invest in, and nurture digital infrastructure assets that are resilient, scalable and pivotal in meeting today’s burgeoning demand for data, cloud services and the adoption of artificial intelligence.”

– Additional reporting by Zak Bentley