Blackstone Reaches Agreement to Acquire AirTrunk for $24 Billion

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On September 4, 2024, Blackstone Inc., in collaboration with the Canada Pension Plan Investment Board (CPP Investments), formalised an agreement to acquire AirTrunk from Macquarie Group Ltd and the Public Sector Pension Investment Board for AUD $24 billion (approximately €14.6 billion). Blackstone, the largest alternative asset management firm globally, is headquartered in New York and manages over $1 trillion in total assets, supported by a workforce exceeding 4,500 employees. Founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman, this transaction represents Blackstone’s most substantial investment to date in the Asia-Pacific (APAC) region, contingent upon the approval of the Australian Foreign Investment Review Board. This move highlights the accelerated growth potential of the APAC region, which is projected to account for more than half of the global economy by 2040.

AirTrunk, established in Australia in 2015 by Robin Khuda, launched Australia’s first and largest hyperscale data centres in 2017. Hyperscale data centres are large facilities designed to support the rapid growth of cloud computing and big data applications, essential for supporting the growing demands of digital services, big data analytics, and the Internet of Things (IoT), making them a cornerstone of the modern digital economy. Since 2017, AirTrunk has emerged as the leading data centre platform in the APAC region, with significant operations in Australia, Japan, Malaysia, Hong Kong, and Singapore. Currently managing over 800 MW of capacity for its clients, AirTrunk owns land with the potential to support more than 1 GW of future expansion across the region. With a workforce of over 300 employees, AirTrunk aims to integrate regional insights, innovative design, and a pioneering team to establish a robust hyperscale data centre framework that powers the cloud infrastructure throughout the APAC region. In 2018, the company secured AUD $850 million in financing through Deutsche Bank to facilitate a major expansion of its Australian data centres, leading to a valuation exceeding AUD $3 billion in 2020, following an acquisition of an 88% stake by a consortium led by Macquarie.

Robin Khuda, the founder of AirTrunk, commented on the deal, stating, “This transaction evidences the strength of the AirTrunk platform in a strong-performing sector as we capture the next wave of growth from cloud services and AI and support the energy transition in Asia-Pacific. We look forward to working with Blackstone and CPP Investments, benefiting from their scale, capital, sector expertise, and valuable networks across various local markets, which will help facilitate the continued expansion of AirTrunk” (2024). Khuda is set to retain his role as Chief Executive Officer, with aspirations to drive the company towards becoming a “$100 billion colossus” in the near future. He has garnered recognition within the tech industry, being named one of ‘The Australian Financial Review’s Business People of the Year for 2023’ and in the same year was inducted into the Communications Day Hall of Fame for his contributions to telecommunications.

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Featured image courtesy of The Australian 2024.

Jon Gray, President and COO of Blackstone, emphasised the strategic significance of the acquisition, stating, “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 worldwide across the ecosystem, including data centres, power, and related services” (2024). Gray, a University of Pennsylvania graduate who joined Blackstone in 1992, has been vocal about the importance of the APAc region. Alongside CEO Steve Schwarzman, a graduate of both Yale and Harvard Business School, he highlights the APAC region as being at the forefront of what Schwarzman describes as the ‘fifth industrial revolution,’ reflecting the firm’s confidence in the region’s rapid growth in AI and advanced technologies.” (2024)

Following this landmark acquisition, Blackstone has continued to demonstrate robust growth as it surpassed profit estimates, with assets reaching record levels, including their recent agreement to acquire U.S. software firm Smartsheet for USD $8.4 billion. On October 17, Blackstone announced that it had exceeded Wall Street’s expectations in its quarterly earnings report, with assets under management (AUM) climbing to an unprecedented USD $1.1 trillion. The firm experienced inflows of USD $41 billion during the third quarter and committed USD $54 billion in capital, marking the highest deployment in over two years. Blackstone’s private equity funds reported a 6.2% increase, while its infrastructure funds appreciated by 5.5%. Schwarzman praised these results as indicative of “broad-based acceleration across our business,” resulting in the company’s stock reaching an all-time closing high of USD $159.71 on October 16. With shares having increased by 24% this year, the notable figure is largely attributed to the successful AirTrunk deal and Blackstone’s expansion in the APAC region.

Blackstone’s acquisition of AirTrunk highlights its strategic push into the APAC market, leveraging digital infrastructure to meet surging cloud service demands while positioning itself as a global leader in the evolving digital economy.

Featured image courtesy of AirTrunk News 2024.

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