King & Wood Mallesons (KWM) advised Asia-Pacific & Japan (APJ) hyperscale data centre operator, AirTrunk, in obtaining multi-currency, sustainability-linked debt financing of $4.6 billion (AUD equivalent).
The transaction has been labelled by The Australian Financial Review as 2023’s “biggest loan deal” in the Australian market. The transaction will be used to refinance AirTrunk’s existing debt facilities and will assist AirTrunk to continue its rapid expansion across the APJ region and build on its reputation as a leading data centre and technology provider in the region.
The sustainability-linked loan (SLL) links the AirTrunk’s financing to meaningful and ambitious environmental and social commitments. The KPIs established as part of this SLL include carbon usage effectiveness (CUE), operating power usage effectiveness (PUE), operating water usage effectiveness (WUE), gender diversity and gender pay equity.
It is the first SLL to utilise a CUE metric, and the first to combine CUE, WUE and PUE, ensuring the highest level of environmental transparency and accountability for a data centre operator. The SLL also represents the first publicly known financing by a data centre company to incorporate a gender pay equity target, reflecting AirTrunk’s commitment to diversity, equity and inclusion.
AirTrunk plans to invest all margin incentives from the SLL into social impact initiatives aligned to its four focus areas including Equal Digital Access, STEM Education, Biodiversity and Conservation, and Innovation and Research & Development.
The KWM team was led by Partner, Jeff Clark with support from Senior Associates, Charles Westh and Nicholas Camac and Solicitors, Louisa Thornton and Bella Crulli, with specialist derivatives advice provided by Senior Associate, Kathryn Tomasic.
AirTrunk Chief Financial and Commercial Officer, Prashant Murthy, said:
“In the last two years, we have announced the development of more than half a gigawatt of new capacity in APJ. This landmark SLL ensures that as we scale across the region, we do so as sustainably as possible, driving the industry forward by redefining sustainable financing standards.
With an innovative combination of KPIs linked to the key environmental focus areas in the industry across carbon emissions, energy and water efficiency as well as gender diversity and equity, we are demonstrating our commitment to responsible and sustainable growth. The SLL KPIs also align to our Net Zero by 2030 strategy and further hold us accountable to achieve our climate goals.
We will continue to work with our customers, employees, investors, financing partners, regulatory bodies and communities to drive innovations like these to advance a sustainable future,” Prashant concluded.
Commenting on the deal, Partner, Jeff Clark said:
“We are grateful for the opportunity to assist AirTrunk on their $4.6b sustainability-linked loan, which will enable AirTrunk to continue to expand their hyperscale data centre business in the Asia-Pacific region. The unique features of the sustainability-linked loan highlights the innovative approach of AirTrunk and its commitment to a sustainable environment, diversity and equality.”
Crédit Agricole CIB, Deutsche Bank and HSBC acted as joint Sustainability Structuring Agents for the SLL refinancing. The three financial institutions, along with DBS, ING, Morgan Stanley and MUFG, also acted as mandated lead arrangers, underwriters and bookrunners.
This large-scale deal is yet another example of how KWM continues to advise clients on market leading corporate financing transactions.
