(Bloomberg) -- Blackstone Inc. is tapping banks to provide the entire funding package for its proposed buyout of AirTrunk, sidelining a group of private credit funds that had been in the running to provide part of the financing, according to people familiar with the matter.
Banks including Citigroup Inc., DBS Group Holdings Ltd. and Deutsche Bank AG are in discussions to provide about A$5.5 billion ($3.6 billion) financing at the holding company level, the people said, asking not to be named as the discussions are private. The borrowing would comprise a term loan and revolving credit facility, the people added.
Banks have been able to offer lower interest costs and more attractive terms compared with what the private credit funds had proposed, said the people. The financing hasn’t been finalized and could change as negotiations continue, the people added. Blackstone had been in talks with private lenders for at least A$1.5 billion of junior debt, Bloomberg News reported earlier.
The absence of private credit lenders in this sizable transaction underscores how dominant banks are in the region. Though growing, private credit remains a small niche market in Asia Pacific. However, the size of the space has nearly doubled since 2019 to $99 billion, excluding yuan-denominated funds, according to figures at the end of December 2023 from investment data firm Preqin Ltd.
In addition to the holding company financing, Blackstone will roll over A$7 billion of AirTrunk’s existing loans as lenders have waived the change-of-control provisions, the people said. The company’s existing borrowings include a A$4.6 billion sustainability-linked deal in 2023 and facilities raised by its other operating subsidiaries.
Blackstone had expanded the bank group that provided a A$7 billion pre-arranged funding package from four to six lenders to include DBS and ING Groep NV, according to the people.
Representatives for Blackstone, Citigroup, DBS and Deutsche Bank declined to comment. A spokesperson for ING didn’t immediately respond to queries.
Blackstone and Canada Pension Plan Investment Board agreed in September to acquire AirTrunk in a deal that valued the company at A$24 billion, the alternative asset manager’s largest-ever investment in Asia Pacific.
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