Break the sky-high cost of AI infrastructure! Meta (META.US) completes nearly US$30 billion data center financing, SPV external shelves form a new model for tech giants

The Zhitong Finance App learned that Mark Zuckerberg's Meta (META.US) plans to finalize a financing plan of nearly 30 billion US dollars for its data center park in rural Louisiana in the US. This marks the final step of the largest private equity transaction in history.

According to sources familiar with the matter, Blue Owl Capital Inc. (Blue Owl Capital Inc.) and Meta will jointly own the “Hyperion” (Hyperion) data center campus in the Diocese of Richland, Louisiana, of which the tech giant will retain only 20% of the shares. To support the construction of the park, Morgan Stanley spearheaded the establishment of a special purpose entity (SPV) and arranged over $27 billion in debt financing and approximately $2.5 billion in equity financing for it — a structure used for large-scale transactions that is becoming increasingly common.

According to reports, Morgan Stanley began preparations for the deal earlier this year. During this period, many asset management companies and infrastructure lenders sought opportunities to participate. In the end, Pacific Investment Management Company (Pimco) and Blue Owl Capital stood out.

Spokesmen for Meta, Morgan Stanley, Pimco, and Blue Owl Capital declined to comment.

The financing will provide a reference template for other “hyperscalers” (hyperscalers) to help them avoid affecting their credit ratings while advancing the construction of large-scale data center parks — these companies are currently borrowing heavily to cope with high construction costs. According to data compiled by Bloomberg, in the US bond market alone, by the end of September, the financing scale of technology companies had reached about 157 billion US dollars, an increase of 70% over the same period last year.

People familiar with the matter said that according to the special purpose entity (SPV) structural design, the financing funds were not directly borrowed by Meta, but the SPV was responsible for raising them. Accordingly, Meta will act as the developer, operator, and tenant of the project, which is expected to be completed in 2029.

This structure can help technology companies avoid huge debt on their balance sheets, and at the same time provide Wall Street investors with the option to invest in real assets, making the relevant investments investment-grade. As insurers and other types of investors seek asset-based debt products, the demand for structured investments continues to rise. XAI, an artificial intelligence startup owned by Elon Musk, is also using a similar architecture in its latest round of $20 billion funding — the company only leases chips rather than fully owning them.

People familiar with the matter, who did not wish to be named, said that on October 16, the parties to the transaction completed the final step: they intend to determine the bond issuance price in the form of 144A private equity bonds, of which Pimco will act as an anchor investor.

Two people familiar with the matter said that a small number of investors will receive partial bond quotas. This batch of bonds will expire in 2049, and they are fully amortized bonds. One of the sources added that the bond's issuance rate is expected to be about 225 basis points higher than the yield on US Treasury bonds. People familiar with the matter also pointed out that Morgan Stanley is the sole bookkeeper for the deal. According to a report, S&P Ratings (S&P Ratings) has given the security an investment grade rating of A+.

“Hyperion” is Meta's largest of 29 data centers worldwide. This data center campus in rural Louisiana has a total area of 4 million square feet. By analyzing government data, the park is expected to consume up to 5 gigawatts of electricity when operating at full capacity, which is roughly equivalent to the total electricity consumption of 4 million American households.

Morgan Stanley, which provided consulting services to Meta on this transaction, continues to make efforts in the field of artificial intelligence: in June of this year, the agency provided advice on XAI's corporate bond issuance; currently, it is also underwriting high-yield bonds (junk bonds) for cryptocurrency mining company TeraWolf Inc.

The data center campus in Louisiana is just one of several large data centers Meta is building. Earlier this week, the company announced that it would build another gigawatt-scale data center campus in El Paso, Texas, while also advancing the construction of a large data center in Ohio.