AI infrastructure has been a top priority for Meta, with the company disclosing in a filing just last week that it would offload $2 billion in data centre assets.
Meta has roped in the US bond company, PIMCO and alternative asset manager Blue Owl Capital to finance its $29 billion data centre expansion project in rural Louisiana. Sources have confirmed that PIMCO will manage the $26 billion debt, which is most likely to be issued in the form of bonds, and Blue Owl Capital will provide $3 billion in equity.
The AI race has facilitated various partnerships between tech and finance companies. States are also involved in such collaborations as the demand for data centres is growing, and companies are scouring investment opportunities to meet these demands. This pivot is significant as tech companies have managed to fund themselves this far. However, even industry giants can no longer sustain these rapidly increasing infrastructural costs.
Meta was in talks with Morgan Stanley, Apollo Global Management, and KKR to back this project. However, PIMCO, Blue Owl Capital and Meta have all refrained from publicly commenting on this agreement.
AI infrastructure has been a top priority for Meta, with the company disclosing in a filing just last week that it would offload $2 billion in data centre assets. The social media company’s Chief Financial Officer, Susan Li, said that Meta is seeking partners to co-develop data centres. While most of the funding would come internally, some projects would require considerable external funding. Seeking partnerships would also mean that there would be more flexibility if the project needs change over time.
Meta approved a proposal in June to sell some data centre assets and designated $2.04 billion in land and construction-in-progress as ‘held-for-sale’ in its quarterly report submitted last week. These assets are expected to be given to a third party before the end of twelve months, to jointly develop AI data centres. The filing showed that the total value of these ‘held-for-sale’ assets was $3.26 billion.
CEO Mark Zuckerberg has proposed to invest hundreds of billions of dollars to construct AI data centres known as superclusters for its superintelligence units. The social media conglomerate also raised the bottom end of its annual capital expenditures forecast by $2 billion. Meta has projected stronger-than-expected ad sales due to AI-enabled targeting and content curation. Company executives noted that this profitability has helped offset the rising cost of its strategic AI expansion.
Taking to Instagram’s Threads, Zuckerberg said that Meta’s first multi-gigawatt data centre, Prometheus, will come online next year, and another data centre called Hyperion will be ready over the next few years and can power up to 5 GW. In January, Zuckerberg had revealed that the WhatsApp parent company was willing to spend up to $65 billion this year alone to enhance its AI capabilities so as to put it on par with its rivals like OpenAI and Google.
In June, the Financial Times reported that the Facebook owner planned to raise $29 billion from private capital firms to build AI data centres across the US. The company’s commitment to developing its AI capabilities extended to various partnerships. Along with seeking financial partners, Meta has also invested $14.8 billion in Scale AI, giving it a 49% nonvoting stake in the data-labelling startup.
Meta has been evaluating its options to raise the required capital, consulting with analysts at Morgan Stanley. The company needs a plan to arrange the required finances and is also exploring options to make the issued debt more easily tradable.
Meta is not the only company looking to raise and manage funds for its AI expansion. Microsoft has also sought a capital expenditure of $80 billion this year, with a significant volume of these funds being diverted to build data centres.
Data centres rank first on the list of requirements for tech companies, and in the forthcoming years, more such partnerships between financial service providers and tech companies will come to light to fulfil their demands.
