A major private credit firm is close to finalizing a sizeable financing package to support Elon Musks artificial intelligence venture, xAI. The lender is preparing a $3.4 billion loan to an investment vehicle that will purchase Nvidia chips and lease them to xAI, according to a report published on Monday.
This proposed facility would be the firms second large-scale commitment to equipment-leasing vehicles that underpin xAIs compute needs. In November, the same firm provided a $3.5 billion loan to a similar structure. Alongside the debt, the firm also plans to take an equity stake in the new vehicle, which is targeting a combined capital raise of $5.3 billion made up of both equity and debt.
Sources close to the transaction say the financing could be concluded as early as this week. The structure is designed to provide liquidity relief for xAI as it pursues substantial data center build-out to support AI model development. The transaction is being organized by Valor Equity Partners, an investment firm noted for prior investments in companies linked to Musk.
Those involved view the arrangement as a way to separate the capital-intensive equipment purchases onto a leasing vehicle backed by committed financing and equity, while giving xAI access to the Nvidia chips it needs without an immediate, large cash outlay. The new vehicles $5.3 billion target in combined equity and debt reflects the scale of the compute deployment planners expect to support model training and other AI workloads.
The financing comes after xAI completed a merger with SpaceX, a corporate development noted in reporting on the proposed loan. The parties organizing the transaction aim to align the financing timetable so the leasing vehicles purchases and leases can move forward promptly if definitive agreements are signed.
- Summary: Apollo is near a $3.4 billion loan to a vehicle that will buy Nvidia chips to lease to xAI; it would follow a $3.5 billion loan made in November and include an equity investment, as the vehicle seeks $5.3 billion in total capital.
- Context: The financing is structured to ease xAI's near-term funding needs as it advances plans for large-scale data center capacity. Valor Equity Partners is organizing the deal.