Meta and Blue Owl Strike $30 Billion Deal for Hyperion Data Center
Mark Zuckerberg’s Meta Platforms Inc. is poised to finalize an approximately $30 billion financing package for its data center site in rural Louisiana, representing the concluding phase of the largest private capital deal on record. According to sources, Blue Owl Capital Inc. and Meta will share ownership of the Hyperion data centre site located in Richland Parish, Louisiana, with the tech giant holding only 20 per cent of the site. Morgan Stanley facilitated the financing for the build-out by arranging over $27 billion in debt and approximately $2.5 billion in equity through a special purpose vehicle — a structure for substantial transactions that is becoming more prevalent. The bank began its efforts on the deal earlier this year, as a wave of asset managers and infrastructure lenders sought to establish their presence. Pacific Investment Management Co. and Blue Owl ultimately emerged victorious.
The financing aims to offer a blueprint for other hyperscalers seeking to establish large-scale data centre locations while safeguarding their credit ratings, as companies engage in borrowing sprees to manage escalating expenses. In the US bond markets alone, tech companies raised approximately $157 billion through late September — an increase of 70 percent compared to the same period last year. Within the SPV structure, it is the financing entity that is borrowing the capital, not Meta itself. According to sources, Meta will serve as the developer, operator, and tenant of the project, which is set to be completed in 2029. The structure enables tech companies to steer clear of accumulating significant debt on their balance sheets while providing market investors the opportunity to invest in tangible assets, thereby enhancing their investment-grade status. There is a growing demand for structured investments as insurers and various investors seek debt linked to assets. Elon Musk’s artificial intelligence start-up xAI is adopting a comparable approach for its recent $20 billion fundraising effort, wherein the company opts to rent the chips rather than owning them outright.
On Oct. 16, the parties reached a significant milestone: they are poised to price the bonds in the 144A format, according to sources. A small group of additional investors are being allocated portions of the debt, which is set to mature in 2049 and is fully amortizing, according to the sources. The bonds are currently priced at approximately 225 basis points above Treasuries, one of the individuals noted. Morgan Stanley served as the sole bookrunner on the transaction, according to the sources. S&P Ratings has assigned an investment grade rating of A+ to the securities, as stated in a report.
Hyperion stands as the largest among Meta’s 29 data centers globally, encompassing a vast 4 million-square-foot complex located in rural Louisiana. It is anticipated that, at full capacity, it will be capable of drawing up to 5 gigawatts of power — approximately equivalent to the energy consumption of 4 million US homes, as reported in a Bloomberg analysis of government data. Morgan Stanley, which provided counsel to Meta on the deal, is making significant strides in the AI sector, having also advised xAI during their corporate debt raise in June and is presently marketing junk bonds for TeraWulf Inc., a cryptocurrency mining firm. The Louisiana site represents one of multiple expansive data centers that Meta is constructing. The company revealed earlier this week the development of another gigawatt-sized complex in El Paso, Texas, and is simultaneously constructing a significant center in Ohio.
