Meta Seeks $29 Billion for AI Data Centers, Partners with Private Equity Firms

Meta, the social media giant, is in advanced discussions with several prominent private equity firms, including Apollo Global Management, KKR, Brookfield, Carlyle, and PIMCO, to raise 29 billion dollars. The funds, which will be split between 3 billion dollars in equity and 26 billion dollars in debt, are earmarked for the construction of AI data centers across the United States. This significant investment underscores Meta's commitment to advancing its AI capabilities and infrastructure.

The collaboration with these private equity giants is expected to accelerate the development and deployment of AI technologies, positioning Meta at the forefront of the AI revolution. The move is part of a broader strategy to enhance Meta's competitive edge in the tech industry, particularly in the realm of AI-driven innovations. By securing substantial funding, Meta aims to build state-of-the-art data centers that will support its ambitious AI projects, ensuring that the company remains a leader in the rapidly evolving field of artificial intelligence.

Meta's chief executive has been significantly increasing the company's investment in AI, acknowledging that Meta has fallen behind competitors in this area. The company's large language model, Llama 4, did not meet expectations, and the release of its flagship model, "Behemoth," has been delayed. To catch up, Meta recently announced a 15 billion dollar investment in ScaleAI, a data labeling startup, and hired its CEO to join a new "superintelligence" team focused on developing general AI. The company has also been actively recruiting top AI talent from competitors, including three leading researchers from OpenAI who joined Meta this week.

In May, Meta increased its annual capital expenditure forecast by up to 10%, to between 64 billion dollars and 72 billion dollars, citing "additional AI data center investments" and "increased costs of infrastructure hardware." This month, Meta also signed a 20-year agreement to purchase power from a nuclear plant in Illinois to support its AI computing needs and entered into four partnerships with Invenergy, a clean energy group.

Meta's decision to partner with large asset management companies aims to share the risks and costs of massive investments, giving it an edge in the AI computing race. This trend is not unique; other tech giants are also turning to private investment firms for funding. For instance, OpenAI is collaborating with Blue Owl to invest 15 billion dollars in building a data center in Texas and is in talks with SoftBank and Oracle for a 500 billion dollar data center joint venture.

Blue-chip companies are increasingly relying on private investment firms to avoid the pressure on their balance sheets from large capital projects. These transactions are typically conducted through special purpose vehicles or joint ventures, where asset management companies receive significant minority stakes, and companies contribute assets in exchange for the capital provided by private investment firms. This structure helps companies keep similar debt financing off their balance sheets, avoiding impacts on their leverage ratios and credit ratings.

Private investment firms, such as Apollo, have previously partnered with Intel on an 11 billion dollar deal to fund its semiconductor manufacturing plant in Ireland, exchanging equity in its business unit and guaranteed cash flows. Apollo and Blackstone, along with other asset management companies, have established relationships with major insurance companies and pension providers, which require high-quality investments approved by regulatory bodies. These institutions seek returns higher than government or corporate bonds, leading them to these customized financing arrangements.