City lawyers say GPU financing is the new data centre gold rush

As AI drives need for bigger information centres, lending institutions are progressively funding the expensive Graphics Processing Units(GPUs )inside them, which can cost practically as much as the structures themselves.

Information recommends that given that the generative AI boom removed in 2023, worldwide financial investment in GPUs and AI chip facilities has actually been staggering, with figures suggesting it has actually surpassed $1 trillion (₤ 755bn). Last September, it was reported that Nvidia invested as much as ₤ 11bn in Britain’s AI environment, a relocation that would see the UK host Europe’s biggest GPU cluster by the end of this year.

GPUs are specialised chips that power AI computing by processing huge quantities of information at the same time, making them costly due to high need, complex production and minimal supply.

Magic circle law practice Clifford Chance partners Emma Matebalavu and Matt Dunn informed City AM that GPU funding is “the huge pattern” at the minute. A single high-end GPU can run in between $20,000 and $30,000 and take in around a kilowatt of power.

European information centres race for power

While data-centre financial investment has actually broadened beyond the preliminary structure, power, preparation and innovation dangers all stay considerable elements for financiers.

Matebalavu and Dunn discussed that stabilised websites with grid-connection, preparing approval and even long-lasting occupants are bring in various sources of capital, such as pension funds and insurance companies, and can be re-financed through ranked capital-markets offers.

In August, FTSE 100 investor Tritax Big Box exposed strategies to raise ₤ 350m through a brand-new share concern to pump into the building and construction of London information centres. The cash will fund 2 brand-new information centre tasks, set for conclusion by 2031, that will offer computational capability to London.

In spite of increased work and interest, power schedule stays a significant restriction on information centre financial investment, with other jurisdictions increasing since of their grid gain access to.

The attorneys kept in mind that the European market is broadening beyond standard centers. Matebalavu stated Frankfurt, London, Amsterdam, Paris and Dublin (referred to as FLAP-D) stay essential, however Milan, Madrid and Scandinavia have actually drawn in more activity recently.

“The location that’s most likely most resilient and most discussed at the minute in Europe is Scandinavia,” Matebalavu stated. Dunn discussed: “You have eco-friendly power, like hydroelectric power in Norway, wind and nuclear power in Finland.”

This comes as Prime Minister Andy Burnham revealed Great British Grid last month, an openly owned arm of Great British Energy that will intend to challenge existing network operators and accelerate connections for services.

Britain’s need connection line leapt from 41GW in November 2024 to 125GW by June 2025, according to Ofgem. Burnham stated grid hold-ups were “dragging development down”, as the shake-up was anticipated to considerably impact Britain’s thriving information centre market.