Meta has plenty of money, why do they need private equity to fund this?
if you have $100M and you need a $1M, you'd use your credit line and borrow $1M and pay it back from interests coming from $100M. it's not that different in corp.
Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster
31–40 of 69 posts
Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster
#32Meta has plenty of money, why do they need private equity to fund this?
if you have $100M and you need a $1M, you'd use your credit line and borrow $1M and pay it back from interests coming from $100M. it's not that different in corp.
That doesn't make any sense.
You'll be paying a higher rate of interest on your loan than you're receiving on your cash.
You'd be better off taking the $1m directly out of your cash pile.
Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster
#33Earlier quoted context omitted.
if you have $100M and you need a $1M, you'd use your credit line and borrow $1M and pay it back from interests coming from $100M. it's not that different in corp.
That doesn't make any sense. You'll be paying a higher rate of interest on your loan than you're receiving on your cash. You'd be better off taking the $1m directly out of your cash pile.
[deleted]
Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster
#34Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster
#35Earlier quoted context omitted.
if you have $100M and you need a $1M, you'd use your credit line and borrow $1M and pay it back from interests coming from $100M. it's not that different in corp.
That doesn't make any sense. You'll be paying a higher rate of interest on your loan than you're receiving on your cash. You'd be better off taking the $1m directly out of your cash pile.
Not necessarily. You can get an interest rate lower than your investment return rate.
Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster
#36Earlier quoted context omitted.
That doesn't make any sense. You'll be paying a higher rate of interest on your loan than you're receiving on your cash. You'd be better off taking the $1m directly out of your cash pile.
Not necessarily. You can get an interest rate lower than your investment return rate.
When interest rates were particularly low years ago, we saw a large number of companies issuing bonds and then using the money to just do stock buybacks.
Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster
#37Meta has plenty of money, why do they need private equity to fund this?
> structured in such a way as to keep the debt off of the Social Network's balance sheets
Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster
#38Earlier quoted context omitted.
Isn't the first rule of business that you spend other people's money, whenever possible?
Another #1 is to get a good return on your money. But tech companies horde cash because they don't have anywhere they see as a good investment. You'd think investing in their own data centers would get a better return than cash. Kind of makes you wonder why everyone is so eager to fund these projects for them.
Theoretically, tech companies valuations are based on the notion that the best place for them to invest money is internally, that their internal flywheel is the absolute highest return on capital.
Practically speaking, they also need to build data centers, and real estate has more pedestrian (returns and) valuations, even when it houses fantastical uber tech.
Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster
#39Earlier quoted context omitted.
Hence the big push currently ongoing to allow 401ks to invest in private markets
Wouldnt that be pocket change?
The exact value of all 401k isn't really known, but the average account value is estimated at ~135k, if (let's say) 200 million Americans have a 401k, that comes out to 27 trillion.
Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster
#40People wanted massive investments in the electric grid. Thanks to AI boom, that's finally happening. Except, they're also going to be massively using the electric grid.
Maybe we'll be blessed by AI companies making money but staying under usage projections. Then, those areas have more power.