CoreWeave, a highly specialized cloud services provider, recently secured an impressive $2.3 billion debt facility, spearheaded by Magnetar Capital and Blackstone. This substantial funding, backed by Nvidia chips as collateral, will be utilized to fuel the company’s expansion efforts, responding to the ever-increasing demands of AI workloads.
Among the contributors to this facility are Coatue and DigitalBridge, alongside renowned names like BlackRock, PIMCO, and Carlyle. The notable use of Nvidia H100 chips as collateral underscores the immense value of such cutting-edge hardware in the intensely competitive AI sector.
This exceptional loan also highlights the flourishing market for private asset-based financing, wherein private equity firms opt for lower-risk lending secured by tangible assets and assume more corporate debt when conventional banking options become sluggish.
Michael Intrator, the CEO of CoreWeave, stated, “Through careful negotiations, we arrived at an optimal schedule for collateral inclusion, depreciation, and payoff. Borrowing against our asset base provides an extremely cost-effective means to access the debt markets.”
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CoreWeave, backed by Nvidia, has significantly benefited from the surge in generative AI, thanks to its purpose-built and scalable cloud infrastructure.
Its strategic partnerships with AI startups and cloud service providers, with whom it also competes, have enabled the creation of powerful AI clusters to handle substantial workloads.
One of CoreWeave’s key advantages lies in its exclusive access to the most advanced and sought-after Nvidia chips, which are currently in limited supply.
This gives the company a competitive edge over traditional cloud providers like Microsoft, Amazon, and Google, who are grappling with supply constraints while developing their own chips.
The fresh injection of funds will be directed toward acquiring additional graphics processing units, investing in data centers, and expanding the company’s workforce.
Just last week, CoreWeave announced a $1.6 billion data center in Texas and has ambitious plans to establish 14 centers across the United States by the end of the year.
Earlier this year, CoreWeave also secured $421 million in equity, led by Magnetar Capital, valuing the company at over $2 billion.
