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Applied Digital Secures $5B Equity Facility to Expand HPC Infrastructure
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Applied Digital Secures $5B Equity Facility to Expand HPC Infrastructure
Applied Digital Corporation (Nasdaq: APLD) has entered a $5 billion perpetual preferred equity financing agreement with Macquarie Asset Management (MAM) to fund its high-performance computing (HPC) business through its subsidiary, APLD HPC Holdings LLC (APLDH). This agreement is set to support the company's Ellendale HPC Campus build-out and bolster its position in the HPC data center sector.
Key Highlights of the Agreement
Investment Scope:
MAM will provide $2.25 million for every executed lease of 1 MW of capacity, with funding capped at $900 million for the 400 MW Ellendale HPC Campus.
MAM retains the right of first refusal on future HPC project funding up to $4.1 billion for 30 months.
Fund Utilization:
Completion of the 400 MW Ellendale HPC Campus.
Repayment of $180 million in existing bridge debt.
Recovery of over $300 million in equity investments for the Ellendale project.
Platform G&A expenses and transaction-related costs.
Equity Terms:
A 12.75% annual dividend on preferred equity, paid in cash or kind, increasing by 87.5 basis points on the fifth and sixth anniversaries if still outstanding.
APLDH retains the ability to redeem MAM’s equity after five years.
Strategic Implications
Wes Cummins, Chairman and CEO of Applied Digital, emphasized the transformative potential of this funding:
"This expanded relationship with MAM positions Applied Digital for significant growth in the industry, establishing Applied Digital as one of the fastest-growing HPC data center owners, operators and developers in the United States."
MAM’s Senior Managing Director, Anton Moldan, highlighted the alignment of Applied Digital’s vision with market needs:
"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."
Broader Context and Market Opportunity
The demand for HPC infrastructure is surging with the acceleration of AI, machine learning, and GPU-intensive workloads. Applied Digital's strategy leverages stranded power resources and advanced liquid-cooling technologies to deliver cost-effective, high-efficiency solutions.
Their Ellendale campus, a cornerstone project, exemplifies this focus, promising ultra-efficient platforms tailored for complex workloads.
What This Means
Applied Digital’s partnership with MAM positions it as a strong contender in the competitive HPC data center market, which includes tech giants like Amazon (AWS) and Microsoft (Azure). While companies like Amazon and Microsoft focus on hyperscale data centers tailored for broad cloud services, Applied Digital's strategy emphasizes purpose-built facilities optimized for the most demanding AI and HPC workloads.
With its focus on stranded power utilization, advanced liquid-cooling technology, and cost-efficient GPU cloud services, Applied Digital differentiates itself as a specialized solution for industries requiring intense computational power. This strategic niche allows the company to carve out a competitive edge in areas where hyperscale providers may prioritize scalability over specialization.
By aligning with cutting-edge technologies and sustainable practices, Applied Digital not only meets the growing demands of AI and machine learning but positions itself as an innovative leader in the Tier 3 data center infrastructure sector.
Editor’s Note: This article was created by Alicia Shapiro, CMO of AiNews.com, with writing, image, and idea-generation support from ChatGPT, an AI assistant. However, the final perspective and editorial choices are solely Alicia Shapiro’s. Special thanks to ChatGPT for assistance with research and editorial support in crafting this article.