Meta, Blue Owl seal $30 bn private capital deal for Hyperion data centre

The financing is set to provide a roadmap for other hyperscalers looking to develop data centre without harming their credit ratings, as firms go on borrowing binges to try to keep up with the costs

By Carmen Arroyo and Laura Benitez

 

Mark Zuckerberg’s Meta Platforms Inc. is set to seal an almost $30 billion financing package for its data centre site in rural Louisiana, marking the final step for the largest private capital deal on record. 

Blue Owl Capital Inc. and Meta will split ownership of the Hyperion data centre site in Richland Parish, Louisiana, with the tech giant retaining just 20 per cent of it, according to people with knowledge of the matter. To finance the build-out, Morgan Stanley arranged over $27 billion of debt and about $2.5 billion of equity into a special purpose vehicle — a structure for large deals that’s becoming increasingly common. 

 

The bank started to work on the deal earlier this year, with a flurry of asset managers and infrastructure lenders trying to get their foot in. Pacific Investment Management Co. and Blue Owl eventually won out, Bloomberg reported. Pimco is the anchor lender.

 

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

 

The financing is set to provide a roadmap for other hyperscalers looking to develop massive data centre sites without harming their credit ratings, as firms go on borrowing binges to try to keep up with the costs. In the US bond markets alone, tech companies raised about $157 billion through late September — up 70 per cent from that time last year, according to data compiled by Bloomberg. 

 

Under the SPV structure, Meta is not borrowing the capital itself, the financing entity is. Meta, in turn, will be the developer, operator and tenant of the project, which will be completed in 2029, the people said.

 

The structure helps tech companies avoid placing large amounts of debt on their balance sheets and gives Wall Street investors the option to put money against physical assets, making them investment-grade. Structured investments are becoming more in demand as insurers and other types of investors search for debt tied to assets. Elon Musk’s artificial intelligence start-up xAI is pursuing a similar structure for its latest $20 billion fundraise, in which the firm just rents the chips instead of fully owning them.

 

On Oct. 16, the parties took the final step: they are set to price the bonds in the 144A format, said the people who declined to be identified as the details are private.

 

A handful of other investors are receiving some allocations of the debt, which matures in 2049 and is fully amortizing, two of the people said. The bonds are pricing at about 225 basis points over Treasuries, one of the people added. Morgan Stanley was the sole bookrunner on the transaction, the people said. S&P Ratings is giving the securities an investment grade rating of A+, according to a report.

 

Hyperion is the largest of Meta’s 29 data centers around the world, a 4 million–square–foot complex in rural Louisiana, which is expected to eventually be able to draw, at full capacity, as much as 5 gigawatts of power — roughly the equivalent of 4 million US homes, according to a Bloomberg analysis of government data. 

 

Morgan Stanley, which advised Meta on the deal, is making a splash in the AI space, having also advised xAI in their corporate debt raise in June and currently marketing junk bonds for TeraWulf Inc., a crypto-currency mining company.

 

The Louisiana site is just one of several large data centers that Meta is building. The company announced another gigawatt-sized complex earlier this week in El Paso, Texas, and is also building a large centre in Ohio.