Databricks secures $5 billion in financing from private credit and banks

(Bloomberg) — Software maker Databricks Inc. has secured more than $5 billion in financing from lenders including Blackstone Inc., Apollo Global Management Inc. and Blue Owl Capital Inc., its largest financing to date, according to people familiar with the matter. a debt financing. this matter.

The technology company, one of the world’s most valuable closely held companies, tapped JPMorgan last year to arrange financing and plans to use the proceeds to offset the tax burden associated with employees selling stock, according to Bloomberg. The debt financing coincides with the $10 billion in funding announced by Databricks late last year, raising its valuation to $62 billion.

The debt package includes a $2.25 billion term loan from direct lenders that is structured as an annual recurring revenue loan and pays a higher interest rate than the secured overnight funding rate, said the people, who asked not to be identified because details of the deal are private. 4.5 percentage points. . Financing also includes a $2.5 billion revolving credit line and a $500 million delayed-draw term loan from major banks including JPMorgan Chase, they said.

Representatives for Databricks, Blackstone, Apollo, Blue Owl and JPMorgan declined to comment.

ARR loans have become a popular avenue for private lenders to lend to fast-growing but not yet profitable software companies. In an ARR loan, creditor protection is measured against the company’s recurring revenue, which is typically based on long-term contracts rather than earnings.

Databricks said it would invest the proceeds from a $10 billion equity round in new artificial intelligence products, acquisitions and a significant expansion of its international market operations, Bloomberg reported in December. The funds will also be used to purchase stock owned by current and former employees. The round was led by Thrive Capital, with participation from Andreessen Horowitz and DST Global, among others.

In the fiscal year ending in January 2025, Databricks expects annual revenue to top $3 billion. Sales rose more than 60% in the most recent quarter ended in October, rapid growth at a time when many software makers are struggling for growth.

Databricks develops software that leverages complex data from a variety of sources to extract, analyze and build artificial intelligence applications. Its main competitors are generally considered to be services provided by cloud infrastructure providers such as Snowflake Inc. and Microsoft Corp.’s Fabric.

—With assistance from Brody Ford.

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