The UK’s $37.2bn National Wealth Fund is exposed to CoreWeave, which has seen its share price fall by more than 40 per cent over the past month, through its investment in Scottish data centres (Yuki Iwamura/Bloomberg)
If you haven't heard CoreWeave, the AI datacentre builder or “neocloud” to use the tech jargon, isn’t having a great time at the moment.
As a result does the UK’s $37.2bn National Wealth Fund have a $270.1mn-sized problem?
Things took a turn for CoreWeave last month after its rising borrowing costs caused its share price to start tumbling – despite one of its co-founders insisting the company was seeking an investment-grade rating to help it access “unlimited” insurance capital to fund its AI build-out.
After its bond yields spiked at between 15 per cent and 16 per cent, almost double the initial issuance rate. So much for investment-grade.
Over the past month its share price has fallen by more than 40 per cent.
The UK’s NWF is exposed to the CoreWeave through Scottish company DataVita which operates two data centres.
The NWF provided a $270mn 'financial guarantee’ in return for 80 per cent of DataVita’s $401.2mn capital raise which will be used to build another data centre and expand an existing one. These are contracted for 15 years to, you guessed it, CoreWeave.
A lot of things would need to occur for this deal to go sour for the NWF according to Morningstar’s equity analyst Luke Yang, who told AOX the deal appears relatively secure “for now”.
“The rise in yields is likely to have a greater impact on future financing and CoreWeave's ability to support continued expansion,” Yang said, adding that for the existing agreements to come under meaningful pressure there would need to be either a significant slowdown in AI infrastructure investment or supply catching up with the demand.
“Neither appears to be the case based on current market trends,” Yang said.
An NWF spokesperson told AOX they “remain focused on supporting the project”.
DataVita did not respond to comment.