APOLLO Global Management is in talks to lead a roughly US$35 billion financing package for Meta Platforms to help develop data centres in the US, according to sources with knowledge of the matter.
The alternative asset manager has discussed providing a major part of the financing, said the sources, who asked not to be identified because the information is not public. KKR is also a part of the investor group, one of the sources said.
The funding conversations are at an early stage and there’s no guarantee a deal will be completed.
Representatives for the firms declined to comment.
Alternative asset managers have teamed up with technology giants before, but the potential deal with Meta stands out. Databricks previously secured more than US$5 billion of financing from lenders including Blackstone, Apollo and Blue Owl Capital, while Apollo last year led an US$11 billion investment in a joint venture with Intel.
Meta already spelt out its investment plans for as much as US$65 billion on projects related to artificial intelligence (AI) this year. They include building a giant new data centre and increasing hiring in AI teams, chief executive officer Mark Zuckerberg said last month.
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There’s an estimated need for hundreds of billions of US dollars to build out the infrastructure needed to power AI demand. Bankers and investors have been eager to get a piece of the action after watching stock markets reward companies critical to the AI ecosystem over much of the past year.
In recent financing deals, Apollo has retained a slice of the funding it provides while syndicating the rest to other investors. The firm has ramped up its ability to write jumbo checks to investment-grade corporations in recent years as it pushes deeper into what it has said is private credit’s next frontier.
Meta has said its focus includes bringing about a gigawatt of computing power online in 2025. The Facebook parent has already announced a US$10 billion data centre in Louisiana and bought new computer chips to power some of its products.
Microsoft, one of the companies leading the Big Tech charge in AI, has said it expects to spend US$80 billion this fiscal year on data centres. Its CEO, Satya Nadella, said last month that his company has to sustain spending to meet “exponentially more demand”.
Meta has invested heavily in AI over the last several years and AI products are a primary focus internally. Zuckerberg has said he wants the company’s AI chatbot, Meta AI, to become the most widely used in the world by the end of the year, and the company has built the bot into most of its social networks.
The company is also building AI-powered smart glasses and developed an open-source large language model called Llama that it hopes will form the foundation for AI products built by competitors.
The investment has been steep. Zuckerberg told investors in January that Meta’s investment in AI infrastructure alone would eventually reach hundreds of billions of US dollars. BLOOMBERG
