AirTrunk has raised another ~AU$650 million (US$432.5m) Sustainability Linked Loan (SLL) in Japan, meaning all of its debt funding is now linked to sustainability commitments.

The Australian operator said this week that it has now raised AU$5 billion (US$3.3bn) in Environmental, Social, and Governance (ESG) financing.

Rendering of AirTrunk's TOK1 campus – AirTrunk

The new SLL in Japan will be used to finance a ‘major expansion’ of AirTrunk TOK1 (TOK1), which will add a second 55MW building to the campus.

The company said it is the first SLL for a data center in Japan and will combine operating energy and water efficiency as Key Performance Indicators (KPIs) for the repayment terms.

AirTrunk said any margin incentives from the new SLL will be invested into social impact initiatives within Japan.

AirTrunk chief financial officer, Prashant Murthy said: “By driving innovation in sustainable financing and creating a lasting impact in our communities, we are committed to powering positive industry change.

“We have now linked all our debt platforms to sustainability commitments, more than doubling our sustainable financing since our inaugural SLL launched in 2021. Our sustainable finance platform complements our recent commitment to net zero emissions by 2030,” he added.

Originally announced in September 2020 and located in the Inzai area of Chiba Prefecture, the first 30MW phase of the TOK1 campus opened in November 2021. The 13.25-hectare site is scalable up to 300MW across seven buildings.

AirTrunk head of Japan, Nori Matsushita said: “Today’s announcement marks another major milestone for AirTrunk as we continue to sustainably enable Japan’s digitalization through the sustainable financing, design, build, and operations of our data centers.”

Whether general-purpose sustainability-linked loans or project-specific green bonds, sustainability-linked financing is quickly becoming a common trend amongst data center and telco firms. The likes of Equinix, Verizon, Aligned, Telefónica, NTT, KPN, Baidu, Atos, Digital Realty, Flexential, and Nabiax have all raised new green-tied funds or converted existing debt to include interest rates tied to sustainability and ESG goals.

In September 2021, the Australian firm converted its existing corporate loan facility of more than AU$2.1 billion (US$1.545bn) into an SLL. If the company hits certain ESG goals, it will see reduced interest payments on its debts.

Last year AirTrunk secured a green loan to finance the development of its TOK2 data center campus in Tokyo, with repayment terms tied to PUE and water efficiency goals.

Deutsche Bank, Credit Agricole CIB, and MUFG Bank acted as joint sustainability structuring agents on the TOK1 SLL.

Deutsche Bank's head of ESG for Asia Pacific, Kamran Khan, said: “AirTrunk continues to set global standards for sustainability in the data center industry. The use of credible KPIs and globally recognized benchmarks for ambitious, price-linked energy and water efficiency targets in data center operations is critical at a time when the global economy is digitizing at an exponential rate.”

The Australian Financial Review also reports this week that AirTrunk’s shareholders, including Macquarie, PSP, and founder Robin Khuda, have also committed more money to the company to help fund its expansion. The size of the investment wasn’t shared, but AFR said it was ‘expected to be less’ than the new AU$650 million SLL.

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