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Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

theregister.com

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Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#41

Post by _heimdall »

jstanley wrote: post #32
halayli wrote: post #31

Earlier 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.

That depends heavily on the terms of the loan you can secure and how you choose to invest the cash.

When you borrow $1M against $100M in cash or assets its generally considered a very low risk loan, meaning you'll likely get good terms and comparatively low rates.

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#42

Post by nradov »

dom96 wrote: post #19

Meta has plenty of money, why do they need private equity to fund this?

The article is poorly written. This deal is mostly debt financing with only a little bit of equity.

In terms of corporate capital structure, shareholder returns are usually maximized by taking on at least some debt (leverage). The precise optimal proportion of debt depends on several factors, particularly credit rating.

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#43

Post by FanaHOVA »

googlywoogly wrote: post #39
victorbjorklund wrote: post #34

Earlier quoted context omitted.

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.

You really think the amount of savings in 401ks is the same size as the GDP of the whole country?

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#44

Post by boulos »

The Bloomberg source is more informative with respect to the financing (https://archive.ph/5WGcA)

> Blue Owl Capital Inc. and Meta will split ownership of the Hyperion data center site in Richland Parish, Louisiana, with the tech giant retaining just 20% of it, according to people with knowledge of the matter. To finance the build-out, Morgan Stanley arranged over $27 billion of debt and about $2.5 billion of equity into a special purpose vehicle

At 225 over (current?) treasuries:

> The bonds priced at about 225 basis points over Treasuries,

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#45

Post by dmoy »

googlywoogly wrote: post #39
victorbjorklund wrote: post #34

Earlier quoted context omitted.

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.

> isn't really known

It's mostly known, but you're probably right it's not exactly known

45 trillion across all retirement accounts, 12 trillion in defined contribution (including 401k), 9 trillion in just 401k

https://www.ici.org/statistical-report/ret_25_q2

In that chart, the 18T of IRA has portion in private equity, and the 15T of pension (defined benefit) has a portion in private equity. The 13T defined contribution plans (of which the vast majority is 401k) can't be placed in private equity right now.

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#46

Post by dmoy »

FanaHOVA wrote: post #43
googlywoogly wrote: post #39

Earlier quoted context omitted.

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.

You really think the amount of savings in 401ks is the same size as the GDP of the whole country?

It's not, but IRA plus 401k is about equal to GDP, yes (and if you add approximately equivalent defined contribution plans like 403b, tsp, etc, then it's more than GDP)

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#47

Post by Forgeties79 »

boulos wrote: post #44

The Bloomberg source is more informative with respect to the financing ( https://archive.ph/5WGcA ) > Blue Owl Capital Inc. and Meta will split ownership of the Hyperion data center site in Richland Parish, Louisiana, with the tech giant retaining just 20% of it, according to people with knowledge of the matter. To finance the build-out, Morgan Stanley arranged over $27 billion of debt and about $2.5 billion of equit…

The sums being thrown around right now are just staggering. All the money that is being leveraged for AI these days is going to absolutely crush some unlucky sods somewhere. All these massive deals can’t all succeed.

Louisiana residents better expect higher energy costs soon as well that’s for sure. No way entergy is content eating the costs of these investments and the state basically has an allergy to taxing or in any way financially inconveniencing companies.

The way things typically go in LA the only guarantee is the residents will be on the losing end in some form or fashion (also many politicians are probably skimming off plenty for themselves and their buddies). Especially with Landry at the helm.

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#48

Post by hollerith »

FanaHOVA wrote: post #43
googlywoogly wrote: post #39

Earlier quoted context omitted.

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.

You really think the amount of savings in 401ks is the same size as the GDP of the whole country?

That's comparing a rate of flow to a static amount. In other words, GDP is 27 trillion per year.

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#49

Post by consumer451 »

lazide wrote: post #11
pcurve wrote: post #7

This article doesn't mention it, but PIMCO is lead lender "Pacific Investment Management Co. (PIMCO) is the anchor lender on the deal. The debt, which matures in 2049, is fully amortising and has been rated A+ by S&P. The bonds were priced at around 225 basis points over U.S. Treasuries." https://pe-insights.com/blue-owl-and-meta-close-record-30bn-... Oof.. I don't know about this one.

Pimco - the company that originated all those bonds every pension fund is sitting on.

I am 99.0% percent sure that the AI bubble burst is coming. I was only 95% sure until very recently.

Does this mean that this investment spreads the bubble burst risk into people's pension funds? (those lucky enough to have such a thing) Or, not necessarily?

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