Meta, BlackRock partner on $14 billion El Paso data center

Meta Platforms and the world’s largest asset manager BlackRock on Tuesday announced a venture to develop and operate a data center campus in El Paso, Texas, a project that would cost about $14 billion in development.

The race to build out AI infrastructure has prompted tech giants to turn to debt sales worth tens of billions of dollars or ‌seek external capital ⁠from ⁠fund managers such as BlackRock due to an unprecedented scale of investment.

Meta said BlackRock-managed funds will take an 80% ownership stake in the venture, with Meta retaining the remaining 20%. A portion of BlackRock’s investment will be financed through $12.5 billion in debt. Meta will also receive a $1 billion distribution to align ownership.

Meta will contribute land and in-progress construction assets worth about $2.3 billion, while BlackRock will ⁠make a ‌cash contribution of about $4.9 billion, the company said.

The Facebook-parent earlier said it was building an over $10 billion data center project in El ⁠Paso, near the Texas-New Mexico border, among 28 data centers it has in either operation or under construction in the U.S.

The data center campus, already under construction, is designed to provide 1 gigawatt of compute capacity, essential for Meta’s AI technologies and supporting its core business. Operations are expected to commence in 2028.

Meta has said it plans to invest $600 billion to build data centers by 2028, with an aim to ‌fast-track work on personal superintelligence, which could help spin up new cash flows from the Meta AI app, image-to-video ad tools and smart glasses.

The social media giant is ⁠building several gigawatt-scale data centers across the U.S., including one in rural Louisiana, a project Meta expected to expand to 5 gigawatts of compute capacity, with investment increasing to more than $50 billion.

Shares of Meta had fallen about 10% so far this year, as investors are scrutinizing costs of AI expansion. The company is scheduled to report second-quarter results on July 29.

Morgan Stanley & Co and J.P. Morgan Securities served as financial advisors to Meta in connection with this transaction.