Blue Owl keeps chasing AI infrastructure deals and is writing the loans to back them

Blue Owl Capital is intensifying its focus on artificial intelligence infrastructure, recently committing significant funds to support two new data center projects. The New York-based investment firm has been actively raising funds for digital infrastructure, amassing nearly $10 billion last year, primarily aimed at securing ownership stakes in data center initiatives. In a recent development, Blue Owl has agreed to provide $240 million in financing for a data center located in Minneapolis, purchased by Cloud Capital and Arcapita Group. Additionally, the firm plans to both invest in and lend to a large-scale data center project under construction in Wichita Falls, Texas, developed by Skybox Datacenters. This role as a lender was not previously disclosed publicly. Despite the strategic expansion, Blue Owl is facing challenges elsewhere in its portfolio, marked by increasing client withdrawals from two of its credit funds. These withdrawals are partly driven by concerns over software companies due to rapid advancements in AI technologies. The firm's credit business, managing approximately $160 billion in assets, remains its largest segment, with around $15.4 billion allocated to digital infrastructure. Blue Owl executives have stated their intent to significantly expand their data center holdings, focusing on both acquisition and development. Notably, last year, the firm committed $2.45 billion to acquire an 80% stake in a major data center project for Meta in Louisiana, which is expected to cost upwards of $30 billion. Moreover, Blue Owl is involved in constructing large-scale data facilities in Texas and New Mexico and has announced plans for a $12 billion campus for Amazon in Louisiana. The firm is also exploring further opportunities, including interest in a data center development site near Birmingham, Alabama, although the sales process is still in its infancy. In the fourth quarter, Blue Owl successfully raised $1.7 billion for a new private wealth-focused vehicle called Blue Owl Digital Infrastructure Trust, which will focus on acquiring data centers. The company also raised its third digital infrastructure fund last May, amassing $7 billion in capital, nearly double its initial target. Co-CEO Marc Lipschultz indicated that another digital infrastructure fund will be launched this year following the strong performance of their prior fund. While Blue Owl witnessed elevated withdrawal requests from its funds, analysts suggest that these concerns may be overstated. The firm managed to accommodate redemption requests despite these being above their usual limits, reflecting a broader trend in the private credit market where similar withdrawal activity has been reported by other firms like Blackstone. As the landscape shifts, Blue Owl's commitment to AI infrastructure investment remains strong, positioning the firm for potential growth amid market volatility.