Thursday, December 7, 2023
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Global data center provider AirTrunk has more than doubled the size of a sustainability-linked loan (SLL) from A$2.1 billion ($1.36 billion)  to A$4.6 billion making the debt-raising not only the first data center SLL (which closed in 2021) in the Asia Pacific region (Apac) but the largest yet for a data center SLL.

“After syndication closed heavily oversubscribed, we can confirm financial close has successfully been achieved,” Prashant Murthy, chief financial and commercial officer at the Sydney-based firm said, although detailed terms of the loan were not revealed.

The transaction will be used to refinance AirTrunk’s existing debt facilities and support the company’s rapid expansion across the region.

Margin discounts from meeting SLL KPIs will go towards social impact investments including equal digital access; STEM education; biodiversity and conservation; and innovation and research and development (R&D).

Five key performance indicators (KPIs) were identified and linked to the refinancing, including carbon usage effectiveness (CUE), operating power usage effectiveness (PUE), operating water usage effectiveness (WUE), gender diversity, and gender pay equity.

CUE measures the amount of green gas emissions produced per unit of IT energy consumption within a data center, while PUE (WUE) gauges the efficiency of a data center’s energy usage by dividing total facility energy (water) consumed by IT equipment energy consumption.

The refinancing achieved a first in utilizing CUE as a metric in SLLs.

“Our KPIs include energy, water, and carbon efficiency which are widely considered the primary measures for the data center industry,” Murthy noted.

“Committing to operating PUE, WUE, and CUE targets is a market first, and through this, we aim to drive the industry forward by redefining sustainability standards.”

Crédit Agricole CIB, Deutsche Bank, and HSBC acted as joint sustainability structuring agents for the SLL refinance. The three financing institutions, along with DBS, ING, Morgan Stanley, and MUFG, also acted as mandated lead arrangers, underwriters, and bookrunners (MLAUBs) for the loan.

Crédit Agricole CIB, Deutsche Bank and HSBC were unable to offer comments on the transaction.

A second-party opinions (SPO) provider was also engaged to provide independent review and assessment on the KPIs and targets to confirm their relevance and that they were ambitious.

“We find that ESG financing is a great platform to broadcast our commitments and encourage the broader community to follow suit,” Murthy said.

AirTrunk’s initial A$2.1 billion ($1.36 billion) SLL transaction closed last September, which was already the largest for a data center by that time, and also the first to integrate PUE into its KPIs.

The company operates data centers in Australia, Japan, Singapore, Malaysia, and Hong Kong, offering nearly 1.38 gigawatts of capacity across the Apac region, more than half gigawatts of which were newly developed over the past two years.

Last month, Hong Kong-based ESR Group Limited secured the city’s first brownfield data center SLL at HK$1.6 billion ($205 million) to fund the conversion of a building into a data center with 21.3 megawatts of designed power load.

According to sources, global issuance of SLLs dropped 70% to $108 billion in the first eight months of 2023, marking the greatest decline among all types of ESG debts. But still, SLLs remain the second-largest ESG debt product globally.


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