Structured investments have become increasingly attractive as insurers and other investors seek debt linked to tangible assets. An example of a firm that has adopted this approach is Elon Musk’s AI company, xAI, in its recent $20 billion fundraising round. In this approach, the firm leases chips rather than owning them outright.
Meta partners with Blue Owl to accelerate AI infrastructure growth
Source Cryptopolitan
Meta announced on Tuesday that it has entered a $27 billion joint venture with Blue Owl Capital to finance and develop its massive Hyperion data center in rural Louisiana.
Under the agreement, Blue Owl will hold an 80% stake in the venture, while Meta will retain a 20% stake and manage construction and property operations at the Richland Parish facility. As part of the deal, Blue Owl contributed approximately $7 billion in cash, and Meta received a one-time payout of $3 billion.
Meta said the partnership provides it with the “speed and flexibility” needed to construct the data center and advance its “long-term AI ambitions.”
Meta partners with Blue Owl to accelerate AI infrastructure growth
The Hyperion data center in Richland Parish, Louisiana, is expected to provide over 2 gigawatts of computing power to train large language models, the technology that powers tools like ChatGPT and Google Gemini.
Doug Ostrover and Marc Lipschultz, Co-CEOs of Blue Owl, said Hyperion is “an ambitious project that reflects the scale and speed required to power the next generation of AI infrastructure.”
Morgan Stanley estimates that major tech firms, including Alphabet, Amazon, Meta, Microsoft, and CoreWeave, are on pace to spend $400 billion on AI infrastructure this year.
OpenAI has recently inked several agreements worth more than $1 trillion to secure around 26 gigawatts of computing power, enough to supply electricity to roughly 20 million U.S. homes.
According to Meta’s finance chief, Susan Li, Tuesday’s deal is “a bold step forward.” The firm has signed leases for the facility with a four-year initial term, including an option to extend, and anticipates that the project will create more than 500 jobs upon completion.
Alvin Nguyen, senior analyst at Forrester, noted that it definitely helps them mitigate risks at the expense of their ownership stake. He continued to say that Meta won’t be required to provide nearly as much capital and can look to finance other facilities or AI infrastructure.
“It also minimizes the debt they are taking on for equipment and property in the event there is a bursting of the AI bubble.”
A few months ago, Meta announced that it had chosen Louisiana to host its largest data center. The construction of that facility is expected to be done by 2030. It is being built on a site roughly the size of 1,700 football fields.
According to Local utility Entergy, the new data center could use almost double the electricity used by the city of New Orleans on a peak day. Meta has been investing heavily in artificial intelligence as it competes with tech giants like Alphabet and OpenAI, both of which are also building massive data centers to support next-generation AI models.
In January, OpenAI, Oracle, and SoftBank launched the Stargate joint venture, pledging $500 billion to build data centers in the coming years. The first Stargate facility went live in September in Abilene, Texas, about 180 miles west of Dallas.
Recently, Google announced that it would invest $15 billion in a data center project in southern India, making it the search giant’s biggest AI hub outside America.
Structured investment gains ground in AI funding
As earlier reported by Cryptopolitan, the new round is more significant than initially expected. It is linked to xAI’s plan to utilize Nvidia processors for Colossus 2, its biggest data center, located in Memphis.
The total package mixes equity and debt. Reports show that about $7.5 billion is in equity, while as much as $12.5 billion is in debt. The deal is structured through a special purpose vehicle that purchases Nvidia GPUs and rents them back to xAI for a five-year period, providing financiers a path to recover their investment without exposing themselves to company-level risk.
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