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BlackRock is preparing to launch a $30 billion-plus artificial intelligence investment fund with tech giant Microsoft to build data centers and energy projects to meet the growing demands of AI.
The financial partnership, which BlackRock The Global Infrastructure Partners fund, which is launching with its new infrastructure investment division, would be one of the largest investment vehicles ever raised on Wall Street. Microsoft and MGX, the Abu Dhabi-backed investment firm, are the fund’s general partners. Nvidia, the fast-growing chipmaker, will advise on the design and integration of the factories.
The investment vehicle aims to address the enormous energy and digital infrastructure needs of the building. AI Products that are expected to face serious capacity issues in the coming years. AI’s computing power requires far more energy than previous technological innovations and has put a strain on existing energy infrastructure.
Called the Global AI Investment Partnership, the effort aims to raise up to $30 billion in equity investments and leverage to support up to an additional $70 billion in debt financing.
The fund would be GIP’s first major fund since the private infrastructure investment group agreed to be acquired by BlackRock for $12.5 billion earlier this year. The deal is expected to close in October.
BlackRock, the world’s largest money manager, has highlighted the energy sector as one of its biggest growth opportunities. “Mobilizing private capital to build AI infrastructure such as data centers and power plants will unlock a multi-trillion dollar long-term investment opportunity,” Larry Fink, BlackRock’s managing director, said in a statement.
The soon-to-launch fund is the latest vehicle created by a major asset manager to address the ever-increasing demand for energy to power generative AI and cloud computing. Earlier this year, Microsoft agreed to back $10 billion of renewable electricity projects built by Brookfield Asset Management in Canada. Microsoft has committed to offsetting 100% of its energy consumption with zero-carbon energy purchases by 2030.
“The country and the world are going to need more investment to accelerate the development of the necessary AI infrastructure. This type of effort is an important step,” said Brad Smith, Microsoft president.
MGX was established earlier this year with the backing of Abu Dhabi’s sovereign wealth fund Mubadala to advance the country’s artificial intelligence efforts. It is in talks to invest in Open AI’s next funding round.
In 2017, Blackstone announced plans to create a $40 billion infrastructure vehicle with the backing of Saudi Arabia, and Brookfield last year raised $28 billion for what has been described as the largest infrastructure fund ever.
The International Energy Agency estimates that global electricity consumption by data centers could exceed 1,000 terawatt hours by 2026, more than double the amount used in 2022.
“Accelerated computing and generative AI are driving a growing need for AI infrastructure for the next industrial revolution,” Nvidia CEO Jensen Huang said in a statement.
In the United States, home to a third of the world’s data centers, electricity demand is growing rapidly for the first time in two decades, driven in part by these energy-intensive facilities. A report from Grid Strategies says the five-year projection for U.S. electricity demand growth nearly doubled in the past year, from 2.6% to 4.7%.
“There is a clear need to mobilize significant amounts of private capital to finance investments in critical infrastructure,” Bayo Ogunlesi, GIP’s managing director, said in a statement.