BlackRock and Microsoft are preparing to launch an artificial intelligence fund worth more than $30 billion to help meet the growing demand for AI. The fund will be used to finance data centres, energy projects, and other infrastructure to support AI.The financial partnership that BlackRock will launch with its new Infrastructure Investment Unit, Global Infrastructure Partners would be the largest investment vehicle ever raised on Wall Street. Microsoft and MGX are the general partners of the fund. Nvidia will provide advice on factory integration and design.
The investment vehicle aims to address the massive power and digital infrastructure requirements of building AI products, which are expected face severe capacity bottlenecks over the coming years. The computing power required by AI is far greater than that of previous technologies, and this has put a strain on the existing energy infrastructure.The Global AI Investment Partnership aims to raise up $30bn of equity investment and leverage it to support an additional $70bn of debt financing.
GIP will be launching its first major fund after BlackRock agreed to acquire GIP for $12.5bn in early this year. The deal is expected to close in October.BlackRock, world’s biggest money manager, highlighted the energy industry as one of the top growth opportunities. Larry Fink said that mobilizing private capital for the construction of AI infrastructure such as data centres and electricity will open up a multi-trillion dollar long-term investment.
The fund, which will be launched soon, is the latest vehicle to be created by an asset manager in order to meet the growing demand for energy needed to power cloud computing and generative AI. Microsoft backed $10bn worth of renewable electricity projects by Canada’s Brookfield Asset Management earlier this year. Microsoft has committed to ensuring that 100% of its energy is met by zero-carbon energy purchases by 2030.
The country and the entire world will need to invest more in capital to develop the AI infrastructure required. Brad Smith, Microsoft president, said that this kind of effort was an important step.
MGX, a company created in early 2018, was backed by the sovereign wealth fund Mubadala of Abu Dhabi to help the country advance its AI. It is in discussions to invest in Open AI’s next funding round.
Blackstone announced in 2017 plans to create a $40bn Infrastructure vehicle, with Saudi Arabia as a backer. Brookfield raised $28bn last year for what they called the largest infrastructure fund ever.According to the International Energy Agency, global electricity consumption in data centres may exceed 1,000 terawatt hours by 2026. This is more than double what was used in 2022.
Jensen Huang said that “accelerated computing and generative AI is driving a need for AI infrastructure to support the next industrial revolution”.The US, home to one-third the world’s largest data centres, is experiencing a rapid rise in electricity demand for the first two decades. This is largely due to these energy-intensive installations. Grid Strategies’ report shows that the five-year forecasts for the growth of electricity demand in the US nearly doubled during the last year.
Bayo Ogunlesi said that GIP’s CEO, Bayo Ogunlesi in a press release, “there is a need to mobilize significant amounts private capital in order to fund investments in vital infrastructure.”
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