Naver to guarantee 18.7 trillion won of debt for cloud unit's AI buildout

Naver said Tuesday its board approved a debt guarantee of 18.7 trillion won ($14.2 billion) for Naver Cloud, the subsidiary that runs its data center and cloud business, backing borrowings of the same amount from Green Holding L.P. and a vehicle provisionally named Asset Co.

The guarantee covers the period through Dec. 31, 2034, and amounts to 64.7 percent of Naver's equity capital of 29 trillion won ($21.9 billion). Naver's total outstanding debt guarantees now stand at 19.5 trillion won ($14.7 billion).

The commitment sits inside a broader financing plan for AI infrastructure that Naver has assembled since July. The company signed a preliminary agreement with global investment firm Brookfield on July 22 for up to $9 billion of AI infrastructure funding, and a $1 billion strategic investment contract with Nvidia two days later. Brookfield is to raise as much as $9 billion through special purpose vehicles to finance construction of AI factories and related infrastructure.

Naver Cloud is the country's only provider of large-scale GPU-as-a-service, and supplies AI models and GPU access to customers including Hyundai, Korea Hydro & Nuclear Power and the Bank of Korea. It is also taking part in the building of a national AI computing center.

The guarantee lands as Naver's core businesses are generating steady sales growth while spending on AI weighs on profit. In the second quarter, revenue rose on solid growth in its main businesses and faster expansion of its consumer-to-consumer marketplace, but operating profit was roughly flat from a year earlier as short-term costs rose for infrastructure, content and data needed to compete in AI.

Naver Cloud is a consolidated subsidiary of Naver.