Apollo (APO.US) doubles down on the data center track: its subsidiary Argo increases its stake in TierPoint, deepening its AI infrastructure layout.

After the acquisition agreement reached with Apollo Global Management Inc (APO.US) earlier this year, Argo Infrastructure Partners is further expanding its investment in the data center sector. The infrastructure investment management firm stated that it will increase its stake in data center operator TierPoint. Argo already owns a majority stake in the company and currently plans to hold the majority of TierPoint's shares. This transaction will enhance Apollo's presence in the data center sector. The alternative asset management company reached an agreement to acquire Argo earlier this year (which is still ongoing), allowing Apollo to establish a new foothold in the artificial intelligence infrastructure field. In August of this year, the company also agreed to acquire a majority stake in Stream Data Centers. TierPoint, which has received investments from Argo since 2020, operates data center facilities and leases hosting space, with clients including Groq Inc., a provider of AI services, and others. With the surge in spending on cloud computing capabilities and chips for training and running artificial intelligence, data center assets have become a hot commodity. Since 2023, TierPoint has issued approximately $2 billion in investment-grade asset-backed securities. This includes $240 million related to the acquisition of a data center site named Tek Park in Pennsylvania, where the company previously leased facilities. Investment-grade ratings allow insurance companies to invest without needing to hold large amounts of cash to meet regulatory requirements. The rise of investment-grade data center financing notes has seen pension companies increasingly venture into the artificial intelligence field as they take on the task of providing a social safety net for Americans. Apollo, which owns pension provider Athene, has invested its substantial cash reserves in various credit instruments. Argo, founded in 2013, primarily invests in digital infrastructure, renewable energy, transportation, and other industries.