Blair Seideman:

Noah, let's get right into it. A $90 billion capital raise doesn't come together overnight. How long had J.P. Morgan been working toward this moment with Alphabet?

Noah Wintroub:

They don't happen overnight, although this transaction did happen in a single day. And so, we began a relationship with Alphabet over 20 years ago. I've been in Silicon Valley for the last 30 years, and very early on, some of our very brightest employees started to go over to a small company called Google. And we had a chance to be a very small role in the IPO in 2006 and really developed our relationship over the next decade. And so, it's an overnight transaction, but the relationship is built over meetings and over decades. And we've had a lot of those meetings with a lot of folks over there. And it's been a fantastic run for the last 20 years.

Blair Seideman:

And the backdrop here is really unlike anything we've ever seen. Alphabet announced 180 to 190 billion in capex investment in 2026 and the expectation is, for 2027, for that number to be even higher. When you're sitting across the table from a company planning this level of investment, how do you start to frame the investing conversation?

Noah Wintroub:

We're at a point where a lot of hyperscalers, including Alphabet, are spending more than the total cash flow on capex investments. We look back at other periods, the railroads, electrification, the wiring of the world for the internet, and if you look at the significant investments that happen and the ultimate endgame winners, which are often on the application layer, including companies like Alphabet, you get very comfortable that these kind of investments are supported by cash flow. But you also get comfortable that you need to finance them. And so, this transaction came at a time when Alphabet was really considering how to continue to expand and grow into a business that they really have a conferred right to own. And so, one of the jobs we did was to really tell the story of why AI was a tailwind for them, and I think that went very, very well. And then also really the fact that, while those numbers are very large, so is the amount of cash flow this company generates and can support. And this equity transaction allowed us to go to multiple different markets, but really going to different pockets of capital for different amounts of capital. Because, as you said, on an absolute basis, this was the largest equity offering in the history of the capital markets at a very interesting time in the markets.

Blair Seideman:

Indeed... So let's talk about deal structure. This wasn't a plain vanilla equity offering. You had common equity, convertible, mandatory, preferred, an ATM program, a private placement into Berkshire Hathaway. Talk us through the architecture of the deal.

Noah Wintroub:

First idea was, what's the maximum we could get in the markets in terms of market access? So on the common equity piece, that is the largest common equity offering we've seen in the markets for a follow-on and for a primary equity raise at the time. There has been a larger one since. And so, as we thought about the sizing of that, we thought about what the market capacity was in that market. For the mandatory equity, we had a couple things to think about. One was the maximum size and what we could do in terms of the terms in that transaction because there are some limitations. But we looked at the size of the market and it turned out that that market is even larger than I think we had all anticipated going in. And so, that was a very pleasant surprise, as was the overall demand. So when we launched the transaction, it was actually launched at a smaller way. And the ATM was a little bit interesting, which is a lot of that was going because historically, when employees sold their options and cashed out of their options when they vested, they would pay the tax at Alphabet out of their treasury. And so, as they stopped doing that, they used an ATM program to make up for that and also for general corporate purposes. And so, those four markets allowed us to play off each other and get the best execution in each of those markets. And the theory of the case at the time was to go to those markets, and it turned out to be absolutely the right answer.

Blair Seideman:

Speaking of execution dynamics, this was a weekend wall cross, books covered at launch, a one-day public marketing effort, with pricing after market close on June 2nd. As you think about a deal of this magnitude, what did the execution playbook look like? And what were the moments that tested the team the most?

Noah Wintroub:

Whenever you're doing a deal that affects public markets, you have to do it under the cover of darkness. So our team was extraordinarily small, the whole group was extraordinarily small, and we needed to digest a lot of information from multiple investors during that wall cross to come up with a judgment of how to launch this deal and the confidence we could do it in a very effective manner, in and out of the market, to reduce market risk. And so, it was an incredibly intense weekend, from beginning to wall-cross investors and really understand where they stood and doing it in a very confidential way. And so, what we were able to do is really compress the timeline to make it happen in a market that is fairly dynamic, at a time when there was a lot of activity in the market. And so, we needed to ensure there was enough capacity in the market, there was enough interest in the name, and that we were able to complete the size.

Blair Seideman:

We've seen massive IPOs, debt raises, infrastructure deals, hyperscaler capex programs. What does this transaction say in terms of where we're at in that cycle?

Noah Wintroub:

It's a really good question. So this is a very unique cycle. A couple of things are going on in this cycle that I think are pretty unique. First of all, the depth of the capital markets today are very significant. So there's over $150 trillion of capital out there in the markets. And so, if you look at a $90 billion capital raise against that, it would seem quite small. But it's quite a large transaction on an absolute basis as well. If you look at how a lot of the infrastructure is getting financed, a lot of it's done with debt. And so, a lot of the hyperscalers, including Alphabet, have done a lot of debt financing. And I think this was a significant departure because equity financing is not something Alphabet had done for 20 years, and as they said in the transaction, not something they're going to do for the very foreseeable future. And what we're really seeing out there is the markets are very cooperative.

They believe in financing this. They know there's $10 trillion or so of capital that needs to be invested. They're looking for smart stewards of capital. And when they find them and find stewards that are willing to go multi-market, willing to be very smart about the levels of debt they take, and willing to be very smart about dilution, they're very interested in becoming part of that story. And so, we've been fortunate at J.P. Morgan to finance almost all of those transactions across the market. From our balance sheet perspective, we hold and we underwrite a lot of that. And from a market execution perspective, we know who's interested in what, what their thresholds are, what their criteria are, what the demand is, how they hold. And so, it's a very unique perspective that I think we provide to our clients. And I'm so excited about what this sector is becoming. I think you're going to see one of the most magical decades and centuries ahead as we go through breakthroughs and everything from medicine to space exploration, to a deeper understanding of ourselves. And so, I've never been so bullish and I've also never been so proud to be at a place where we can really, at scale, help execute in the capital markets, whatever market that is, and in the case of Alphabet, really do a phenomenal groundbreaking transaction in the equity capital markets.

END