Meta Picks Pimco, Blue Owl for $29 Billion Data Center Deal

Meta Platforms Inc.has selectedPacific Investment Management Co.andBlue Owl Capital Inc.to lead a $29 billion financing for its data center expansion in rural Louisiana as the race for artificial intelligence infrastructure heats up, according to people with knowledge of the matter.

Pimco is expected to lead a $26 billion debt portion of the financing, while Blue Owl is providing $3 billion of equity, said the people, who asked not to be identified because the discussions are private. The debt portion is likely to be issued in the form of investment-grade bonds backed by the data centers assets, they said.

The social media company has been working withMorgan Stanleyto raise funds in a competitive process that pitted some of the largest names in private credit against each other.Apollo Global Management Inc.andKKR Co.were also vying to lead the financing until the final round of talks, said the people. Other investors may be added at a later stage, they added.

Private investment firms have been aggressively seeking to deploy capital in transactions secured by physical assets or for higher-rated companies in a bid todifferentiate their business. Many see the multi-trillion dollar market for private asset-based finance and data centers in particular as a massive opportunity to expand their revenue streams.

Researchby the the management consulting firm McKinsey Co Inc. estimates that data centers will require $6.7 trillion to meet demand for computing power globally by 2030.

AI Development

The Meta financing will help the firm accelerate its development of artificial intelligence, which executives have said is already producing meaningful revenue for the company. Meta said costs will grow at an even faster pace next year particularly as it focuses on AI infrastructure needs and the niche technical talent that can fine-tune its models.

We generally believe that there will be models here that will attract significant external financing to support large-scale data center projects that are developed using our ability to build world-class infrastructure while providing us with flexibility should our infrastructure requirements change over time, Chief Financial OfficerSusan Litold investors during an earnings call last week.

Other tech giants have partnered with investment firms to fund AI data centers.Microsoft Corp.has teamed up withBlackRock Inc.to raise$30 billionin private equity capital for strategy that could deploy as much as $100 billion in the space, whileElon MusksxAI Corp.raised$5 billionin the broadly syndicated debt market in June as it pushes ahead with the build-out of advanced AI models. Earlier this week, Apollo said it had agreed to buy amajority stakeinStream Data Centers.