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Meta is looking to raise $29bn to fund its all-in push into artificial intelligence, turning to private capital firms to finance its build out of data centres in the US.
Talks between the Instagram-owner and private credit investors have advanced, with several large players including Apollo Global Management, KKR, Brookfield, Carlyle and Pimco involved in the discussions, according to people familiar with the matter.
Meta is hoping to raise $3bn of equity from them and then a further $26bn of debt. But it is debating how to structure the massive debt raising, as it considers options for what will be one of the largest private fundraisings of its kind. The company could also look to raise more capital, one person added.
In partnering with big money managers, Meta and its biggest rivals are splitting the risks and costs of massive investments as they compete to secure computing capacity to power their AI models.
Meta was working with its advisers at Morgan Stanley to arrange the financing, and it was considering ways that could make the debt more easily tradeable once it was issued, the people added. That is one factor potential investors who have studied the transaction have raised, given its sheer size.
Meta, Morgan Stanley, Apollo, Brookfield, Carlyle, KKR and Pimco all declined to comment.
Meta chief executive Mark Zuckerberg has been sharply increasing his efforts to become the “AI leader” as the company’s development has lagged rivals this year. Its Llama 4 large language model has not performed as well as expected and the release of its flagship “Behemoth” model has been delayed.
Earlier this month, Meta announced a $15bn investment in data labelling start-up ScaleAI. As part of the deal, the social media group is also hiring Scale’s chief executive Alexandr Wang to a new “superintelligence” team, tasked with developing artificial general intelligence.
Zuckerberg has been personally trying to poach other AI talent, with three top OpenAI researchers announcing this week that they were joining the company. OpenAI chief executive Sam Altman said on a podcast that Zuckerberg had been offering his engineers $100mn sign-on bonuses.
At its earnings in May, Meta raised its full-year capital expenditure forecast by as much as 10 per cent to between $64bn and $72bn, citing “additional data centre investments” to support its AI push as well as an “increase in the expected cost of infrastructure hardware”.
This month, it announced that it had agreed to buy the output of a nuclear plant in Illinois for two decades to power its AI efforts, marking its first nuclear deal, as well as four deals with clean energy group Invenergy.
Private capital firms have also stepped up to finance data centres for OpenAI, with Blue Owl agreeing to help fund a $15bn joint venture to construct a development in Texas.
OpenAI is also working with investors including SoftBank and Oracle on a $500bn data centre venture.
Blue-chip companies such as Meta have been increasingly relying on private investment firms for firepower, as they look to avoid straining their own balance sheets to fund large-scale capital projects.
Apollo last year struck an $11bn deal with Intel, where it agreed to finance the chipmaker’s semiconductor fabrication plants in Ireland in exchange for a stake in a unit and guaranteed cash flows from the business.
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Private investment groups have increasingly been pitching investment grade corporations on alternative financings to traditional corporate bonds or loans.
Such deals, including the Intel transaction, are often structured as special purpose vehicles or joint ventures, where the asset managers take a large minority ownership share in the vehicle. The company contributes assets to the venture in exchange for the capital — either in debt or equity — that private investment firms provide.
The deals are then highly structured, with income and cash flows from the projects divided between the asset manager and company. The companies benefit from the financings in a critical way: the deals are structured to keep the debt-like fundraisings off their balance sheets, avoiding an impact to their leverage and ratings.
Asset managers such as Apollo and Blackstone now own or have tie-ups with major insurers and annuity providers, which need high-quality investments that regulators will approve of. To generate higher returns than government or corporate bonds offer, they have turned to these bespoke financings.
