Moneymen funds Big Tech’s AI dreams

One Scoop to Start: Centrica and Energy Capital Partners are undergoing exclusive consultations from owners National Grid to purchase the UK’s largest liquefied natural gas import terminal in a deal of around £1.5 billion.

In today’s newsletter:

Private Capital plugs in big technology AI shortage

Large tech groups are planning to spend trillions of dollars on data centers to compete to build more sophisticated AI models.

Behind the fuss, it’s private capital groups that have the majority of the bill.

The AI model unlocks huge amounts of information in the learning process, claiming that the tech giant needs a huge expansion of data center infrastructure.

Historically, the so-called hyperschools of Amazon Web Services, Microsoft Azure and Google Cloud bankrolled data centers with their own cash.

But Big Tech’s dreams are becoming more fantastic.

Meta, Xai and Openai have announced supercomputer projects that cost more than $100 million each.

And that’s just the tip of the iceberg. Analysts at Morgan Stanley estimate that global spending on data centers will reach nearly 3tn by 2029.

These numbers, as Alphabill wrote before, are absolute dollar terms, and should be taken with heavy salt.

But they highlight important points. Less than half of the cash in a data center buildout is expected to come from hyperscalar. The remaining amount is likely to be raised from the more traditional money man, and private credit is expected to fund the largest chunks.

It’s a prediction that’s being played in real time.

Meta, for example, is looking for $29 billion from private capital Giants, including Apollo, KKR, Brookfield, Carlyle and Pimco.

Apollo already deploys $38 billion in such infrastructure, and last week bought a majority stake in Data Center Builder Stream.

Many other big names of private capital, such as Blue Owl and BlackRock’s global infrastructure partners, have cultivated and committed billions in data center investments.

Last year, Blackstone purchased Airtrunk, an Australian data center platform, for $14.9 billion. It was the second largest data center transaction after the $15.5 billion purchase of Cyrusone, the owner of KKR and global infrastructure partners, US data centers.

Blackstone has won a $1 billion loan from AI data center operator CoreWeave.

Both CoreWeave and Openai are non-investment grade borrowers. And the frenzy that you lend means that more and more speculative projects are securing funds, including some sites that don’t have anchor tenants.

There is a lot of cash on the premise that there is almost an infinite demand for AI infrastructure.

There is a risk that supply will exceed demand in the future. The pace of development also means there is a risk that some projects will become obsolete before they actually get off the ground.

At some point, the music stops. So what?

For more information about the funding gaps private capital is filling, read the latest stories in FT’s series on data centers here.

Did the IPO bankers lose touch?

Underwriters have been on the sidelines for the past few years after inadequate spells on their public list.

It leads to accusations that bankers are making mistakes in trading, as investors are now hoping that the IPO window is reopening.

The crypto exchange supported by Peter Thiel yesterday surged 170% on Bruisch’s debut, then rose 83%. Stablecoin Operator Circle Internet and Design Software Maker’s Figma list followed a similar jump over the past few months.

These surges were newly celebrated by public companies, but critics of the IPO process were less pleased.

Longtime skeptical Bill Gurley argued that the figma list is evidence of “significant inefficiency in the modern IPO process.”

Big Price Jumps creates a sense of headlines and demand, but skeptics claim they leave money on the table for investors who use IPOs to cash out.

Instead of these long-term backers getting all the profits, they jump to stock prices after the company list is often won by the first buyers of IPOs, such as hedge funds.

These criticisms are valid, but they overlook the fact that recent IPO pop appears to be driven by retail demand.

Institutional buyers tend to allocate large amounts of shares during IPOs. This means retail investors who have to buy some of the action after the company is published. This could lead to higher prices. Even after his debut.

Circle and Bullish are crypto companies that wash each day with investors and laundry in the industry, and Figma has elicited a strong retail interest. As Alphaville argued after Figma’s IPO, such demand is essentially difficult to price.

The recent blockbuster list could attract the attention of private equity companies sitting in a record-breaking mountain of vintage deals looking for an exit.

Bankers may point to the flashy technology and crypto debuts in recent weeks as evidence of the return of the IPO.

However, the types of businesses advertised by acquisition groups tend to be far less retail-friendly than the recipients of this year’s IPO. And one swallow doesn’t make summer.

Job movements

Ikea has appointed Juvencio Maeztu as the new CEO. He took over Jesper Brodin in November and will become the first non-Swedish boss of the furniture group.

The UK Treasury has appointed former John Lewis chairman Charlie Mayfield to the board.

Citigroup has appointed Amit Nayyar as co-head of the UK and EMEA Technology Investment Bank. He will join from JP Morgan. Meanwhile, Aashish Dhakad will join the bank as head of a private credit source in North America. He was previously at ARES Management.

In August, he will hire Jeremy Jacobs as a senior advisor to Washington to provide strategic communication advice on M&A, shareholder activism and investor relations. He previously worked for Key Messages, H/Advisors Abernathy and Joee Frank.

Smart Lead

The Strange Union Perplexity bid for Google Chrome has little meaning on its surface, writes Lex. There are probably more to that offer than pure M&A.

After Donald Trump’s executive order last week began resignation plans for the industry, the transparency of private equity fund Mambo Jumbo has become more important. The Wall Street Journal is that one buyout group can’t understand the numbers.

The hot weather of the shorts season arrives at FT columnist Robert Armstrong, who produced the acronym for the “taco” trade. The office shorts are now redundant, and he declares and pays homage to pioneer Eric Pratt, who wears the trunk of DD.

News Round Up

Saudi Arabia’s PIF wins $8 billion in prize money for the value of flagship megaproject (ft)

The Porsche-Piëch family seeks a partnership on defense investments (FT)

Scott Bessent Floats deploys export taxes to more industries (FTs)

Retail investors fight for the right to bet on natural disasters (FT)

Shell loses legal claims against US LNG Operator Venture Global (FT)

UK Business Appointment Manager (FT) for Jewelry Chain Clare

“Traffic Light” dashboard allows attendance (FT) at PWC Monitor Office