Apollo Global Management announced a $3.5 billion capital solution for Valor Compute Infrastructure L.P., a fund managed by Valor Equity Partners, to support a $5.4 billion acquisition and lease of data‑center compute infrastructure for a subsidiary of xAI Corp. The deal includes NVIDIA GB200 GPUs and is structured as a triple‑net lease, giving Apollo quarterly cash distributions and upside through ownership of the compute assets.
The financing is a debt‑equity hybrid that provides Apollo with a steady cash stream while allowing the firm to benefit from any appreciation in the high‑margin compute assets. The triple‑net lease structure transfers operating and maintenance responsibilities to the tenant, reducing Apollo’s risk profile and ensuring predictable cash flows. The partnership with NVIDIA, which serves as an anchor limited partner, further strengthens the transaction’s credit profile and signals confidence in the long‑term demand for AI compute.
Apollo’s strategy has been to deploy flexible, asset‑based capital into high‑growth technology infrastructure. Since 2022, the firm has invested more than $40 billion in next‑generation infrastructure assets, and the current deal aligns with that focus. Apollo also leverages its low‑cost Athene retirement liabilities to fund the transaction, enabling more attractive financing terms for both Apollo and the tenant.
xAI, founded in 2023, announced a $20 billion Series E funding round that exceeded its $15 billion target, with participation from NVIDIA and Qatar. The new data‑center infrastructure will power xAI’s next‑generation AI models, such as Grok, and the investment reflects the broader surge in capital required to meet the growing demand for AI workloads. NVIDIA’s role as an anchor limited partner underscores the confidence in the AI infrastructure sector’s long‑term growth.
Market reaction to the announcement was modest but positive. Investors viewed Apollo’s significant capital deployment into the AI infrastructure space as a signal of confidence in the sector’s secular growth, while the involvement of NVIDIA added credibility to the deal. The transaction also highlights Apollo’s ability to execute large‑scale, high‑margin infrastructure deals, reinforcing its position as a leading provider of flexible capital solutions.
"This transaction represents a hallmark, downside‑protected investment for Apollo in the AI infrastructure space and underscores our role as a leading provider of flexible, asset‑based capital for next‑generation assets," said Christopher Lahoud, Apollo partner. "We are supporting the growth of this transformative technology by investing in the critical infrastructure that enables it, alongside highly regarded partners like Valor and NVIDIA," he added. "VCI is an extension of our continued service as a firm to xAI. The fund provides investors with the opportunity to invest in critical artificial intelligence compute infrastructure with quarterly cash distributions and upside through ownership of the compute assets," said Antonio Gracias, Valor founder, CEO and CIO.
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