Macquarie Asset Management is boosting its exposure to US data centres with a US$5 billion ($8 billion) investment in next-generation digital infrastructure company Applied Digital (NADAQ:APLD).
The perpetual preferred equity financing facility, with investment vehicles of funds managed by Macquarie Asset Management, are for Applied Digital’s HPC business conducted through APLD, a subsidiary of Applied Digital.
Applied Digital develops, builds, and operates next-generation data centres and cloud infrastructure.
Northland Capital Markets acted as sole placement agent to the company. Goldman Sachs, Citizens JMP Securities, and TD Securities acted as financial advisors. Needham & Company acted as financial advisor to the company’s board of directors. Lowenstein Sandler acted as legal counsel to the company. Simpson Thacher & Bartlett LLP acted as legal counsel to Macquarie.
Macquarie Asset Management Senior Managing Director Anton Moldan says 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.
“The significant progress at the Ellendale HPC campus makes this a very compelling opportunity for us as well as for potential hyperscale customers. 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,” Moldan says.
Under the terms of the unit purchase agreement executed, APLDH will issue perpetual preferred equity units and common equity units for an investment by Macquarie of US$2.25 million for each executed lease of 1 MW of capacity, up to US$900 million to support the full 400 MW build-out of the Ellendale HPC Campus.
The investment proceeds, in conjunction with future project financing, are expected to be used to complete the buildout of the 400 MW Ellendale HPC Campus, repay the existing bridge debt, which is currently outstanding at about US$180 million. It will also allow the company to recover over an estimated US$300 million of its equity investment in the Ellendale HPC Campus, fund platform G&A, and pay transaction expenses.
Macquarie has a right of first refusal on all future HPC data centre project funding, up to an additional US$4.1 billion for 30 months following close.
Applied Digital CEO Wes Cummins says he believes this expanded relationship with Macquarie positions Applied Digital for significant growth in the industry, “establishing it as one of the fastest-growing HPC data centre 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 GW of HPC data centre capacity, including our Ellendale HPC Campus,” Cummins says.
“With an 85% 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.”
Applied Digital’s purpose-built facilities are engineered to unleash the power of accelerated compute and deliver secure, scalable and sustainable digital hosting, along with turnkey SaaS and GPU-as-a-Service solutions.
Write to Adam Orlando at Mining.com.au
Images: Unsplash
