00:00Busy busy guy. These deals fast and furious. Tell us about Broadcom. Ryan would you find out. Yeah sure. Good
00:08to see you Carol as always. I think this one is if this you know if this comes to light
00:13comes to pass this would be among the largest that we've seen of this type of deal. I want to
00:18just throw us back a little bit to June when we saw Broadcom announced that that partnership with Blackstone and
00:24Apollo where essentially they were looking to strike an agreement to provide sort of 20 gigawatts of compute globally for
00:29AI deployment. I mean I think you could probably see this as some kind of extension of that agreement of
00:35sorts. This would essentially see Blackstone and Apollo participate again per hour sourcing and reporting in a deal that could
00:43essentially see Broadcom line up as much as 100 billion dollars in debt. I mean when you put that together
00:48it's sort of 30 billion being provided by Apollo and Blackstone and then Broadcom itself essentially looking at maybe backstopping
00:55such guaranteeing somewhere in the region of 60 to 70 billion dollars per year.
01:00So not insignificant. So not insignificant. So not insignificant. And I think this is kind of you know where the
01:04trend is sort of heading right now which is just this insatiable need for AI compute to use the jargon.
01:09And I will just say the market takes it or we'll see right like ultimately that's what we continue to
01:14watch if there's the investor appetite but as we talked earlier at the beginning of our broadcast with Ira Jersey
01:21and Michael McKenzie you know investors are you know offering these corporate offerings for debt are higher than what you're
01:30seeing maybe in treasuries and potentially crowding out increasingly the increase the interest I should say when it comes to
01:37treasury demand.
01:37Yeah Ryan I mean do we have an understanding yet of like what what kind of debt this would take
01:42form of. I mean we know that Blackstone and Apollo will be leading the financing but you have to imagine
01:49that they're going to be several different tranches and they'll be selling this to other institutional investors right.
01:56Totally. Yeah. So I mean in the in the story we just put out just crossed a short while ago
02:00I mean I think the best way to probably think about this is that the Blackstone and Apollo piece will
02:04be a junior piece.
02:05And then sort of chunk the slug that Broadcom is looking to you know that that 60 billion piece if
02:11you will is going to be you know senior secured and they are out to two banks among others as
02:18part of that group.
02:19You know that you would have to expect that there would be a number of banks here that would be
02:22looking to help Broadcom with this because I think you know if you think about the just the sort of
02:27cost of providing something on this scale.
02:29I mean Broadcom is looking to do this as efficiently as possible and Hawk 10 the CEO of Broadcom is
02:34known for this very very intricate kind of financial engineering and in fact I think Broadcom has become kind of
02:40an industry leader in this in this part of the sort of chips financing space.
02:44So I mean when you sort of think about this in the round this is kind of unprecedented but for
02:50if anyone's going to pull pull this something like this off this would be Broadcom.
02:53It definitely just shows right Ryan like how expensive it is for these companies to build out all of the
03:01AI infrastructure with that prior deal that Blackstone and Apollo led it was 35 billion dollars but it was only
03:09to build out capacity for one gigawatt.
03:13You know of compute and in your story here you know we're talking about a partnership that could eventually reach
03:2020 20 gigawatts of compute so there's going to be a lot more of these right.
03:24Yeah I mean this is I think this is kind of the tip of the iceberg and I think you
03:28have to wonder you know we sort of single out Anthropic at the top of that story on the Bloomberg
03:32but you know there are also going to be other companies and the beneficiaries of this deal.
03:36And this will come out in the wash but I think if you're if you're looking on now I mean
03:42you think about the agreements that Broadcom has with other companies including Apple we throw that out there they have
03:47the accord that they announced earlier this year.
03:50I don't want to throw it back there but I will go there I mean you know do we start
03:53to talk about the circular financing thing again I don't know perhaps I don't know but here we are.
03:58I you know and I think this is something we have to watch right Ryan I'm just I go back
04:02to the interest I mean as long as investors are willing to support it why wouldn't you tap the credit
04:08markets or the debt markets and continue with the fundraise.
04:11I will say when we talk to our Mandy Singh of Bloomberg Intelligence who looks at the AI spend as
04:17a whole I mean a lot of the fundamentals seem to continue to be there in terms of backlogs and
04:21demand.
04:22We saw that on the recent earnings and a lot of folks anticipate who are in this sector mind you
04:29they might be talking their book expect this to continue for a couple more years.
04:33Yeah and I think that's probably true.
04:35I think you also have to think about this in the context of the NVIDIA transaction that we saw you
04:40know those that group of CEOs Goldman I mean David Solomon was there Larry Fink was involved that group of
04:46that group of financing partners sort of coming together for one provider.
04:50I mean now you have a sense to where I think Broadcom is probably going more down the private capital
04:54route.
04:55I think it's just it's different right I think it's two sides of the same coin in a way I
04:59think investors will clearly take a view on sort of the securitization of all of this.
05:03I think the NVIDIA agreement itself still has a little bit of you know there are a few details that
05:08this will need to be sort of fleshed out as far as how you actually securitize those chips as a
05:12financing class.
05:13Yeah.
05:13An ethic class sorry.
05:15But you know that itself was entirely novel.
05:18This is this is also novel.
05:19I think that NVIDIA deal did obviously unnerve a few people but this is just I think people are having
05:25to think on the fly here as far as this AI financing rollout is concerned.
05:29Right and maybe it's just a case of it's just so massive that we've got to be innovative disrupt a
05:34little bit or when you start to innovate or disrupt too much is it a sign that maybe something's not
05:38quite right.
05:39And this is what we're all trying to figure out here but but the cap raise is still happening.
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