HONG KONG/SYDNEY: A Blackstone-led consortium is borrowing about A$5.5 billion ($3.7 billion) to fund its A$24 billion buyout of AirTrunk, two sources with direct knowledge of the matter said, as the U.S. firm ramps up its presence in Asia.

Blackstone said on Wednesday it has partnered with the Canadian Pension Plan Investment Board (CPP Investments) to acquire AirTrunk, believed to be the largest hyper-scale data center company in the Asia-Pacific region.

Investors are flocking to the sector as artificial intelligence drives demand for manufacturing capacity. The financing package will be the second-largest acquisition loan in the region this year, according to Dealogic data.

The deal includes a term loan of A$2 billion and a revolving credit line of A$3.5 billion, the sources said.

Blackstone declined to comment.

More than 10 banks are participating in the loan consortium, including Credit Agricole, Deutsche Bank, Morgan Stanley and Japan’s MUFG, the sources said.

Credit Agricole, Deutsche Bank and MUFG declined to comment. Morgan Stanley did not respond to a Reuters request.

The financing will cover up to 50 percent of Blackstone’s equity investment in the deal, one of the sources said, while the total deal value includes AirTrunk’s debt and capital expenditures for committed projects.

HIGH PRICE

According to sources, the consortium’s purchase price would be more than 20 times higher than AirTrunk’s projected earnings before interest, taxes, depreciation and amortization (EBITDA).

The loan would seem to be highly leveraged in a typical buyout, but lenders are taking into account AirTrunk’s estimated growth and cash flow over the next few years, based on agreements in place, the sources said.

AirTrunk borrowed about A$4.6 billion from more than 30 lenders last year and that debt will be transferred after the acquisition, the sources said.

AirTrunk’s value rose during the sale process, which officially began in March, due to the increasing use of artificial intelligence, which requires more data center capacity.

CPP Investments said in a statement published on Wednesday that it will own a 12 percent stake in AirTrunk once the transaction is completed.

AirTrunk founder and CEO Robin Khuda will continue to lead the Sydney-based company and retain an unspecified stake following the completion of the transaction.

Khuda, 45, who came to Australia from Bangladesh when he was 18 to complete an accounting course at the University of Technology Sydney, built a $24 billion data centre business in less than a decade. “Our journey has never been easy, we have faced many adversities and we have always emerged stronger and more resilient,” Khuda said in a LinkedIn post. He admitted he had used his retirement savings to save the business and considered bankruptcy. “It was Christmas 2016 and I had to deliver our first data centre by September 2017 … we had reached a point where we had run out of money. I even took money from my retirement fund, so that was rude of me,” he told the Australian Financial Review Business Summit in March. “I even called my lawyer and said I needed advice on insolvency.” His LinkedIn profile lists a three-year stint at data center operator NextDC as deputy CEO and executive director, but omits his role as CEO of mobile payments company Mint Wireless, which he resigned from after six months.