Macquarie Group inks Applied Digital investment and funding deal in US data centre play
The group’s asset management unit has upped its exposure to the burgeoning data centre sector through an investment and funding deal worth up to $8.1bn.
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Macquarie Group’s asset management unit has upped its exposure to the burgeoning data centre sector in the United States through an investment and funding deal with Applied Digital Corporation, worth up to $US5bn ($8.1bn).
In a statement, Macquarie said funds managed by the group would invest up to $US900m in Nasdaq-listed Applied Digital’s Ellendale High Performance Computing (HPC) data centre campus.
The agreement also gives Macquarie’s asset management arm the right to invest as much as an additional $US4.1bn across Applied Digital’s future HPC data centre pipeline and the right of first refusal on all HPC project funding up to the same amount, for 30 months following the transaction’s close.
Dallas Texas-based Applied Digital is a designer, builder and operator of digital infrastructure. The deal agreed with Macquarie covers a $US5bn perpetual preferred equity financing facility, with investment vehicles of funds managed by the asset management unit, for Applied Digital’s High Performance Computer division.
Macquarie’s shares rallied 0.4 per cent to $226.26 in mid-morning trading on Wednesday, as the S&P/ASX200 also edged higher. Applied Digital’s shares climbed 10 per cent to $US8.54 on Tuesday in the US, but pared some of those gains to be changing hands at $US7.98 in after-hours trading.
The strategic move by Macquarie is the asset manager and investment banking group’s latest in the fast-growing and capital hungry data centre industry.
Macquarie last year divested its stake in data centre business Airtrunk, alongside PSP Investments, in a mammoth $24bn deal. Macquarie’s 60 per cent holding in AirTrunk was held via its second Asia-Pacific Infrastructure Fund and banking analysts have estimated the group may reap performance fees as high as $1.3bn from the sale.
Other Macquarie investments in the sector include Netrality Data Centers in the US which was part of an investor tour by the Australian group in 2023, Aligned Data Centers based in Texas and UK and European-focused Virtus Data Centres.
There are also direct data centre investments by Macquarie’s capital division, which sit on the group’s balance sheet.
They include an equity investment in California-based Prime Data Centers and a majority investment in pan-European platform KelvinX.
While demand for data centres is increasing rapidly there are, however, also concerns about their immense consumption of energy.
Macquarie Asset Management’s senior managing director Anton Moldan highlighted that Applied Digital had “a differentiated strategy with access to a unique near-term power portfolio” across North America.
“The significant progress at the Ellendale HPC campus makes this a very compelling opportunity for us as well as for potential hyperscale customers,” he said. “With our global experience as an owner and manager of data centre platforms, we see this as highly attractive opportunity to help build an industry-leading HPC data centre company well positioned in these high growth segments of the market.”
The deal with Applied Digital sees Macquarie take a 15 per cent stake in a subsidiary of the former, through the issue of perpetual preferred equity units and common equity units, which will support the 400 megawatt build-out of the Ellendale HPC Campus, the companies said in a statement.
They expect the investment proceeds and the future project financing will be used to “complete the build out of the 400MW Ellendale HPC Campus” and repay existing bridging debt.
Applied Digital’s chairman and chief executive Wes Cummins said: “With an 85 per cent ownership stake in both existing and future HPC assets and access to a project-level preferred equity financing facility sufficient to fund our HPC project pipeline, we believe we are poised for transformative progress.
“We are excited to have MAM’s (Macquarie Asset Management’s) support as we establish ourselves as a leader in the Tier three data centre infrastructure sector, while continuing to develop and operate large-scale, state of the art data centres for world-class customers at the forefront of the AI revolution.”
Originally published as Macquarie Group inks Applied Digital investment and funding deal in US data centre play
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