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US private equity group Blackstone is set to acquire Sydney-based data centre business AirTrunk in a multibillion-dollar bet on the growth of cloud computing and artificial intelligence.
Blackstone, alongside the Canada Pension Plan Investment Board, is in the final stages of talks to acquire AirTrunk from Macquarie’s asset management arm, according to two people close to the situation. The acquisition is expected to cost A$20bn (US$13.5bn), according to a separate person with knowledge of the deal.
The deal, if completed, would be the largest transaction in Australia this year. Blackstone was competing for AirTrunk against a rival consortium including private equity firm Silver Lake and asset manager DigitalBridge.
The Australian company has rapidly built a pan-regional empire with 11 data centres. The business, which was founded in 2016, is one of the region’s fastest-growing technology companies and was considering a potential listing before the sale process kicked off. The sale price will include debt, said two people familiar with the situation.
Blackstone has been aggressively expanding into data centres in recent years. It owns a $55bn portfolio of data centres and others under construction and plans to invest billions more in “prospective pipeline development”, Blackstone’s chief executive Stephen Schwarzman said during an earnings call in June.
AirTrunk was founded by Robin Khuda, who immigrated to Australia from Bangladesh when he was 18 and remains chief executive of the business. Khuda initially relied on overseas investors, including Goldman Sachs, to bankroll the fledgling business as he built bigger data centres that could meet the demand for increasing cloud and AI infrastructure in Asia.
Macquarie, alongside Canadian pension fund PSP Investments, acquired an 88 per cent stake in the business in 2020 as part of a bet that the growth in AI would require substantial investment in digital infrastructure. That deal valued AirTrunk at A$3bn.
AirTrunk has significantly stepped up its expansion in Japan this year and in May opened a data centre outside Tokyo. Analysts said Japan would be a high-growth market for data centre companies as more industrial groups digitise their manufacturing processes.
In an April 2024 report, analysts at Goldman Sachs forecast that the collective power demand from data centres would rise 160 per cent by the end of the decade from 400 terawatt hours of electricity in 2023.
Consolidation in the data centre market has picked up in the past year as the combination of high growth and long-term cash flows has attracted infrastructure investors. AustralianSuper, the country’s largest pension fund, invested A$2.5bn in Europe’s Vantage Data Centers for a minority stake last year.
Blackstone and Macquarie declined to comment. AirTrunk did not immediately respond to a request for comment.
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