Blackstone Inc., the global investment firm, has secured a substantial financing package from a consortium of banks to fund its proposed acquisition of AirTrunk, a leading data center operator in the Asia-Pacific region. The deal, which is set to be Blackstone's largest investment in the region, highlights the firm's strategic focus on the rapidly growing data infrastructure sector.

Blackstone Outmaneuvers Private Credit Funds in Securing Favorable Financing Terms

Securing Bank Financing at Lower Costs

Blackstone has successfully negotiated with a group of banks, including Citigroup Inc., DBS Group Holdings Ltd., and Deutsche Bank AG, to provide a comprehensive financing package of approximately A$5.5 billion (US$3.6 billion) at the holding company level. This financing will comprise a term loan and a revolving credit facility, offering Blackstone more favorable terms compared to the proposals from private credit funds that had previously been in the running to provide a portion of the funding.The ability of the banks to offer lower interest costs and more attractive terms has given Blackstone a significant advantage in securing the necessary financing for the AirTrunk acquisition. This development underscores the continued dominance of traditional banking institutions in the region's financing landscape, despite the growing presence of private credit funds.

Leveraging Existing Debt Facilities

In addition to the new holding company-level financing, Blackstone will also be rolling over A$7 billion of AirTrunk's existing loans, as the lenders have agreed to waive the change-of-control provisions. This includes a A$4.6 billion sustainability-linked debt facility that AirTrunk secured in 2023, as well as other borrowings from its operating subsidiaries.By incorporating AirTrunk's existing debt facilities into the acquisition structure, Blackstone has been able to streamline the financing process and minimize the overall cost of the transaction. This strategic approach highlights Blackstone's expertise in navigating complex deal structures and leveraging existing assets to optimize the financial terms.

Expanding the Bank Group

To further strengthen the financing package, Blackstone has expanded the bank group that provided the A$7 billion pre-arranged funding, adding DBS and ING Groep NV to the consortium. This move not only diversifies the lender base but also demonstrates Blackstone's ability to secure the participation of a broader range of financial institutions in the deal.The inclusion of additional banks in the financing arrangement underscores the appeal of the AirTrunk acquisition and the confidence that the financial community has in Blackstone's ability to execute on this strategic investment.

Significance of the AirTrunk Acquisition

The AirTrunk acquisition represents a significant milestone for Blackstone, as it marks the firm's largest-ever investment in the Asia-Pacific region. The data center operator has established itself as a leading player in the rapidly growing data infrastructure sector, catering to the increasing demand for cloud computing, digital services, and data storage in the region.By securing this acquisition, Blackstone is positioning itself to capitalize on the long-term growth potential of the data center industry, which is expected to continue its upward trajectory driven by the proliferation of digital technologies and the ongoing digital transformation across various industries.The successful financing of the AirTrunk deal further solidifies Blackstone's reputation as a savvy and strategic investor, capable of navigating complex transactions and securing favorable terms even in a competitive financing landscape.