Two new investments from Macquarie Asset Management Applied Digital and Aligned Data Centers, one week apart. As the deals reveal, AI and HPC are not reimagining technology: they’re rewriting the manual for data center building.
Macquarie Asset Management (MAM) is taking a chance to be a powerhouse in the growing AI and HPC markets. In just a week, MAM has announced two strategic investments in Applied Digital and Aligned Data Centers totalling more than $17 billion for innovation, growth and capacity expansion in key infrastructure markets in the Americas.
Each of these deals reflect the huge need for AI-enabled and HPC-powered datacentre’s, the digitization of the world economy and the appetite for computing power to fuel AI (AI), ML and other compute intensive workloads.
Applied Digital Signs $5 Billion HPC Deal with Macquarie Asset Management.
The partnership, announced by Applied Digital Corporation on 14 January, promised a revolution for HPC infrastructure with Macquarie. The deal positions Applied Digital as a leading designer, builder and operator of cutting-edge data centers in the US for the increasingly high volume of AI and HPC workloads.
To offset the $5 billion pledge, MAM-managed funds will commit up to $900 million to Applied Digital’s Ellendale HPC Campus in North Dakota, and $4.1 billion for HPC projects after that. This can drive over 2 GW (gigawatts) of HPC data centre construction.
MAM is an international asset manager managing about $633.7 billion in assets. The Australia-based Macquarie Group, which specialises in diversified investments in real estate, real estate, credit and equities. Applied Digital believes that it is now on track to transform the HPC data centre with its new historic deal with Macquarie, redefining its status as an AI/HCC revolution leader.
The ownership structure for MAM’s holding here is perpetual preferred equity and a 15% common stock share in Applied Digital’s HPC business unit with Applied Digital still holding an 85 % of the current and future HPC assets.
As far as other financial returns go, the funding will allow Applied Digital to pay back approximately $180 million in project-level debt, repay more than $300 million of its Ellendale campus equity investment, and cover other project costs.
Boosting the Ellendale HPC Campus and More!
In the contract, MAM will pay $2.25 million per megawatt (MW) of capacity leased at Ellendale HPC Campus (which will be 400 MW build-out). Future project financing and MAM’s investments will finance the building of this incredibly modern facility, as well as support Applied Digital’s entire data centre pipeline.
Investment Details
Term limits in the deal call for signing a hyperscale lease on the 100 MW Ellendale HPC data centre, signing operating agreements and other normal terms. Minimum equity investment: Applied Digital will give $1 million per MW on the Ellendale campus and $750,000 per MW on other HPC projects.
Northland Capital Markets was the exclusive placement agent and Goldman Sachs & amp; Co. LLC was the senior financial advisor on the transaction. Citizens JMP Securities, TD Securities and Needham & amp; Company were financial advisors, and Lowenstein Sandler LLP and Simpson Thacher & Bartlett LLP were legal counsel to Applied Digital and MAM, respectively.
Strategic Implications
The alliance with MAM shows Applied Digital’s commitment to delivering the latest HPC solutions. From stranded power to cutting-edge features such as closed-loop liquid cooling, the firm plans to accommodate AI, ML, graphics rendering and other heavy-duty workloads.
“We have unrivalled stranded power and cutting-edge technologies and our data centres are designed for the most demanding AI and HPC workloads,” Cummins added. “We think Applied Digital’s creativity will allow customers to be leaders in a fast-paced technological environment.
The Right Data Centers Signs Over $12 Billion in Contracts to Drive Growth
A day later on 15 January, Aligned Data Centers said it has successfully raised over $12 billion in new capital to support its rapid growth and innovation strategy in order to serve growing demand for AI and cloud services. Funds led by Macquarie Asset Management backed the fundraising effort along with other large international digital infrastructure investors.
More than $5 billion in primary equity and more $7 billion in debt commitments are a part of the financing, establishing Optimum Networks as a world-class provider of scalable, flexible data center solutions. The new investment will enable Aligned to build 5+ GW of future data center capacity in the Americas and help the company support its growing number of hyperscale and enterprise customers looking for AI-enabled infrastructure.
Investor Confidence and Market Opportunity
The new money reflects Aligner’s robust growth, execution and relentless growth search. The money will help build out the company’s next-generation data center platform, specifically adapted for AI, machine learning and cloud computing workloads.
Macquarie’s Strategic Vision
This week’s opportunistic action from Macquarie Asset Management reflects how the fund world is stepping up its bets on AI and HPC as the digital infrastructure of the future. These investments are an economic wager on AI and HPC’s future, and reflect the upcoming data centre architecture, in which sustainability, scalability and performance have been at the forefront of the planning.
In the past few years, Macquarie Group has pushed its entry into the data centre market with numerous strategic investments and alliances. Here are two of the firm’s more recent deals:
- In 2022, Macquarie Asset Management stepped up by taking a controlling minority interest in the data center provider Virtus Data Centres of ST Telemedia, a leader in Europe. This was to facilitate Virtus’s growth and build Macquarie’s footprint in the digital infrastructure space.
- In 2021, Macquarie Capital strategic alliance and equity investment in Prime Data Centers, an operator and developer of wholesale facilities based in California. This partnership was to grow Prime’s pipeline and provide long-term growth in the Americas and Europe.
Perspective
The global demand for AI training, deep learning models, and advanced analytics are eating up all the data centre space. Its transactions this week with Applied Digital and Aligned Data Centers represent how, by heavily investing in two more companies that have similar strategies and different designs, MAM is building a robust portfolio ready to take advantage of this technological rift.
The contracts also reflect the increased demand for dedicated infrastructure for AI and HPC. Standard data centers are not enough for the energy and cooling demands of new AI workloads. Companies such as Applied Digital and Aligned are breaking the Mold with advanced cooling solutions, stranded power designs and GPU-specific designs.
Applied Digital and Aligned seem to have it together now as they are backed by cutting edge methodologies and a financial titan such as Macquarie.
