Macquarie to Invest Up to $5 Billion in Applied Digital's AI Data Centers

Macquarie to Invest Up to USD 5 Billion in Applied Digital's AI Data Centers

Closing conditions require securing a 100 MW lease with a hyperscaler for Ellendale HPC. Applied Digital Corporation (Applied Digital) said it has entered into an agreement with Macquarie Asset Management (MAM) for funding of up to USD 5 billion to enable high performance computing (HPC) growth. The financing will accelerate the development of Applied Digital's data center projects, including the 400 MW Ellendale HPC Campus. Also Read: Rakuten Mobile to Raise Up to USD 2 Billion with Macquarie-Led Consortium Under the agreement, Applied Digital subsidiary APLD HPC Holdings LLC (APLDH) will issue equity units, with MAM committing USD 2.25 million per megawatt (MW) of leased capacity. This arrangement could provide up to USD 900 million to complete the full 400 MW build-out of the Ellendale project, repay approximately USD 180 million in bridge debt, recover USD 300 million in equity investments, and fund operational and transaction costs. Additionally, MAM holds a right of first refusal on USD 4.1 billion of Applied Digital's future data center funding over a 30-month period. "Applied Digital has a differentiated strategy with access to a unique near-term power portfolio across North America in markets attractive for computing needs which address the most demanding AI and other HPC applications at scale," said Anton Moldan, Senior Managing Director of Macquarie Asset Management. "The significant progress at the Ellendale HPC campus makes this a very compelling opportunity for us as well as for potential hyperscale customers." "We believe this expanded relationship with MAM positions Applied Digital for significant growth in the industry, establishing Applied Digital as one of the fastest-growing HPC data center owners, operators and developers in the United States. At today's build costs, we will have a significant portion of the equity needed to construct over 2.0 GW of HPC data center capacity, including our Ellendale HPC Campus," said Wes Cummins, Chairman and CEO of Applied Digital. "With an 85 percent 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," continued Cummins. "We are excited to have MAM's support as we establish ourselves as a leader in the Tier 3 data center infrastructure sector, while continuing to develop and operate large-scale, state of the art data centers for world-class customers at the forefront of the AI revolution." Also Read: Telstra and Accenture Announce Joint Venture to Accelerate AI and Data Strategy The preferred equity offers a 12.75 percent annual dividend and a minimum 1.80x capital return. The common equity represents 15 percent of APLDH's fully diluted common equity at issuance. MAM's equity can be redeemed by APLDH at any time after the fifth anniversary of the closing, Macquarie said in a joint statement on January 14, 2025. Closing conditions include securing a lease with a hyperscaler for 100 MW of Ellendale HPC data center. MAM will provide an initial USD 225 million, with additional funding contingent on further lease executions.

Australia's Macquarie eyes $5B investment in Applied Digital

Fears of an AI bubble have yet to scare off venture capitalists and private equity firms from pumping billions of dollars into the GPU-packed datacenters at the heart of the machine-learning craze. Case in point, on Tuesday Macquarie, one of Australia's top financial services firms, revealed plans to inject up to US$5 billion into American datacenter operator Applied Digital to finance the construction of new facilities. The Dallas, Texas-based operator is a relative newcomer to high-performance computing, though that hasn't stopped it from trying to replicate the successes of its contemporaries. The biz has followed a similar trajectory to CoreWeave breaking into the HPC services space circa 2022 after a bout of cryptocurrency mining. Like CoreWeave and Lambda, another major rent-a-GPU outfit, Applied offers a variety of datacenter and cloud services powered by Nvidia's chips. And with Macquarie's investment, which includes an initial $900 million round of funding, Applied plans to move forward with its Ellendale High Performance Computing campus in North Dakota while also recovering roughly $300 million in equity previously invested in the 400-megawatt facility. The campus is the one of several Applied Digital datacenters that Macquarie intends to plow money into. Under the agreement, the financial services firm has been granted first right of refusal for all future AI datacenters Applied may pursue over the next 30 months up to $4.1 billion. "At today's build costs, we will have a significant portion of the equity needed to construct over two gigawatts of HPC datacenter capacity, including our Ellendale Campus," Applied Digital CEO Wes Cummins said in a statement. Applied hasn't said when, where, and how many datacenters will ultimately be built, though the press release does seem to suggest that these facilities will be liquid cooled. It is, however, a fairly safe bet that, just like its North Dakota site, future datacenters will utilize Nvidia accelerators -- perhaps even its 120 kilowatt liquid-cooled GB200 NVL72 rack systems. You may recall, Nvidia along with a handful of other investors poured $160 million into Applied Digital back in September to fuel its datacenter build out. It probably doesn't hurt that much of Nvidia's investment is likely to return in the form of GPU orders and AI Enterprise subscription fees. In exchange for its investment, Macquarie has effectively bought itself a 15 percent stake in Applied HPC business with the datacenter operator retaining the remaining 85 percent share. "As an owner and manager of datacenter platforms, we see this as a highly attractive opportunity to help build an industry leading HPC datacenter company well positioned in these high growth segments of the market," Anton Moldan, senior managing director at Macquarie, said in a canned statement. According to our sibling site The Next Platform investing $1.5 billion in infrastructure -- enough to build and network a datacenter with roughly 16,000 H100-class GPUs to rent out -- will net you about $5.27 billion in revenues within four years, assuming a decent mix of spot instances and long-term commitments from customers. Given the estimated return on investment, it's not hard to see why so many capital management firms are clamoring for a piece of the action. It probably doesn't hurt either that GPUs are in such high demand they're now considered fungible. This has enabled datacenters to use them as collateral for massive loans. In fact, last April Macquarie helped to drive half a billion dollars of debt financing backed by Nvidia GPUs into rival DC operator Lambda. Among the biggest beneficiaries of this trend has been CoreWeave, which according to Crunchbase raked in $9.9 billion in funding and debt financing in 2024 alone. Some investment groups now appear to be cutting out the middleman and pursuing datacenter developments. Last fall, US investment giant Blackstone said it would plow £10 billion (US$12 billion) into a massive AI datacenter in northeast England. ®