Meta, Blue Owl Seal $30 Billion Private Capital Deal for AI

Mark Zuckerberg’s Meta Platforms Inc. is set to seal an almost $30 billion financing package for its data center 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 center site in Richland Parish, Louisiana, with the tech giant retaining just 20% 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 center 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% 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 is scheduled to be completed in 2029, the people said. Through its 20% stake in the project, it’ll provide almost $6 billion of construction funding, according to a ratings report.

The SPV 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 startup xAI is pursuing a similar structure for its latest $20 billion fundraise, in which the firm just rents the chips from a financing vehicle instead of fully owning them.

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

A handful of other investors received some allocations of the debt, which matures in 2049 and is fully amortizing, two of the people said. The bonds priced 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 gave the securities an investment grade rating of A+, according to a report.

By Friday morning, the bonds were being offered at 105 cents on the dollar, a separate person said, a rare jump for lightly syndicated investment grade bonds. In a matter of hours, at least $1 billion of bonds exchanged hands well above par, one of the people said.

For Pimco, the deal is an important win, as it has been striving to diversify beyond its background in publicly traded debt. Earlier this year, the credit giant also made a push into asset based finance by purchasing, alongside KKR & Co, a nearly 10% stake in Harley-Davidson Inc.’s financing unit and buying up its retail loans, Bloomberg reported.

Hyperion, a 4 million–square–foot complex in rural Louisiana, is the largest of Meta’s 29 data centers around the world. It 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. Entergy Corp. is set to provide up to 3 GW of power for Meta’s campus by December 2028, S&P’s ratings report said, as long as it can complete a substation, several transmission lines and power generation plants.

Morgan Stanley, which advised Meta on the deal, is making a splash in the AI space. The bank also advised xAI in their corporate debt raise in June and is currently marketing junk bonds for TeraWulf Inc., a crypto-currency mining company. Morgan Stanley also worked on the $40 billion purchase of Aligned Data Centers by investors led by BlackRock Inc.’s Global Infrastructure, Bloomberg reported.

The Louisiana site is just one of a series of 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 center in Ohio.