Applied Digital Corporation (Nasdaq: APLD) has announced a transformative agreement with Macquarie Asset Management (MAM) to fund up to $5 billion in high-performance computing (HPC) infrastructure projects. This agreement positions Applied Digital as one of the emerging leaders in the design, construction, and operation of HPC data centers in the United States, specifically designed to support advanced artificial intelligence (AI) workloads.
Financing Agreement Details
- Initial Investment: MAM will allocate up to $900 million for the complete construction of the Ellendale HPC campus, with a planned capacity of 400 MW.
- Right to Additional Investments: MAM will have the option to invest up to an additional $4.1 billion in future Applied Digital projects over the next 30 months.
- Equity Stake: The investment structure gives Applied Digital a majority ownership of 85% in all current and future HPC assets, minimizing dilution for public shareholders.
The capital will enable Applied Digital to:
- Repay $180 million of existing debt.
- Recoup $300 million of its own investment in the Ellendale campus.
- Finance general operations and transaction costs.
Ellendale HPC Campus: Pioneering the AI Revolution
The Ellendale HPC campus is the centerpiece of the agreement. This project will utilize cutting-edge technology, such as closed-loop liquid cooling systems, to provide an ultra-efficient platform for critical workloads, including AI applications, machine learning, graphic rendering, and high-performance computing.
According to Wes Cummins, CEO of Applied Digital:
“With this agreement, Applied Digital positions itself as one of the fastest-growing HPC data center developers in the United States. With secured funding, we will be able to build over 2 GW of HPC capacity, consolidating our position in a rapidly expanding market led by the AI revolution.”
Strategic Vision and Benefits
For Applied Digital:
- Leadership in HPC: This agreement positions the company as a key player in the market for Tier 3 data centers specifically designed for AI.
- Increased Operational Efficiency: The financing structure allows Applied Digital to operate with lower capital costs and accelerate the development of its project portfolio.
- Sustainable Expansion: The design of its data centers prioritizes sustainability and energy efficiency, which are key elements in an environmentally conscious business environment.
For MAM:
- Strategic Participation: With this investment, MAM reinforces its presence in the data center sector, considered a pillar of technology-driven growth.
- Access to Attractive Markets: Applied Digital’s assets offer a unique combination of access to reliable energy and proximity to key customers in North America.
Anton Moldan, Managing Director of MAM, commented:
“This agreement represents an exceptional opportunity to build an industry-leading HPC data center platform, specifically designed to meet the growing demands of advanced applications like AI.”
Key Features of the Financing
- Dividend Rate: The preferred capital will earn an annual dividend of 12.75%, with adjustments starting in the fifth year.
- Minimum Multiple on Invested Capital: MAM’s investment will have a guaranteed minimum return of 1.80x, including the valuation of the equity stake.
- Closing Conditions: A lease agreement is required for the first 100 MW of the Ellendale campus with a hyperscaler client.
Industry Impact and Next Steps
Applied Digital expects this collaboration to enhance its ability to meet the growing demand for high-performance digital infrastructure, necessary for the AI revolution and other critical applications. With over $300 million in recouped funding and expanded access to capital, the company plans to solidify its position in the U.S. market and beyond.
The construction of the Ellendale campus and other projects in Applied Digital’s portfolio aligns with the demands of a rapidly evolving market, allowing clients to leverage infrastructure designed for modern AI needs.
With this agreement, Applied Digital and MAM demonstrate that the combination of technological innovation and solid financial strategies can pave the way for a more efficient and sustainable digital future.
via: applied Digital