Apollo Global Management Inc. is working to ensure the AI infrastructure deals it finances don’t get derailed by local opposition, according to its head of infrastructure.
When pushback emerges, “we listen and respond,” Apollo’s Olivia Wassenaar said in an interview with Bloomberg Television’s Jonathan Ferro, Lisa Abramowicz and Annmarie Hordern.
“We want to make sure we are putting data centers where folks want data centers to be put,” she said on Wednesday.
Opposition to the data centers needed to power artificial intelligence is morphing into a distinct industry hurdle, as communities worry the structures will drive up utility bills and hurt the environment. Recent examples include an Oracle Corp. data center campus in New Mexico — dubbed Project Jupiter — which met intense protests from locals largely concerned about environmental impacts. Oracle ended up invoking force majeure on its contractual obligations .
Such developments add to broader concerns that AI growth expectations may be inflated. Speaking in Singapore on Wednesday, billionaire Ray Dalio warned that artificial intelligence is a “classic bubble” that’s nearing a bursting point thanks to rising interest rates and the need to turn wealth into cash.
Read More: Dalio Says We’re Nearing Point Where AI Bubble May Burst ·
Apollo is focused on the risk of under-investing, Wassenaar said. And the investment thesis is bigger than just AI, she added, citing the need to provide financing for energy infrastructure more broadly.
“There is the AI story and the behind-AI-story,” Wassenaar said. “There is the power, the grid, the gas demand.” And there’s “for sure” still plenty of demand for financing infrastructure tied to artificial intelligence, she said.
Against that backdrop, Apollo isn’t shying away from highly complex deals. “Creativity is part of what we do,” Wassenaar said. At the same time, there’s now a “flight to quality” with investors focusing on “better names, better opportunities,” she added.
Embracing complexity in dealmaking is also a way to adapt to higher interest rates, says Jaycee Pribulsky, Apollo’s chief sustainability officer. The current cost of capital “really requires creativity in structuring deals,” she said in a separate interview last month.
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Apollo has committed to deploying more than $100 billion toward green energy investments and industrial decarbonization by 2030. But Pribulsky says meeting rising demand requires a careful calibration of the energy mix that’s targeted, in order to safeguard affordability and energy security.
Wassenaar says there needs to be an acknowledgment that natural gas, which has emerged as a key power source for data centers in the US, isn’t just a bridge from high- to low-carbon energy.
“We will be using natural gas for a long time,” she said. “This is not just a transition fuel.”
Apollo is “investing in the industrial renaissance and reshoring and the grid and power,” she said. “These are all things we need not just for data and AI but for broader work in the US.”
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