Software maker Databricks has secured over $5bn in financing from lenders such as Blackstone, Apollo Global Management, and Blue Owl Capital, marking its largest debt raise to date, according to Bloomberg citing sources familiar with the matter.
The tech company, one of the world’s most valuable private firms, enlisted JPMorgan Chase to arrange the financing last year. The funds will reportedly help address tax liabilities linked to employee share sales.
This debt raise coincides with a $10bn equity funding round announced late last year, which boosted Databricks’ valuation to $62bn.
Direct lenders have committed to a $2.25bn term loan and a $500m delay-draw tranche for future use, the sources said, requesting anonymity.
The loan, structured around Databricks’ annual recurring revenue (ARR), carries an interest rate of 4.5 percentage points above the Secured Overnight Financing Rate.
Additionally, a consortium of banks, including JPMorgan, Barclays, Citigroup, Goldman Sachs Group, Morgan Stanley, and BNP Paribas SA, contributed a $2.5bn revolving credit facility as part of the financing package, according to the sources.
ARR loans have gained popularity among private credit firms for financing rapidly growing software companies that are not yet profitable. These loans base creditor protections on recurring revenue metrics derived from long-term contracts, rather than earnings.
In December, Databricks announced it expects to exceed $3bn in annualised revenue and achieve positive free cash flow in its fourth quarter, ending 31 January. The company reported over 60% growth in sales during the preceding quarter.
The proceeds from Databricks’ $10bn equity raise will support the development of AI products, acquisitions, international expansion, and the repurchase of shares held by current and former employees. The funding round was led by Thrive Capital, alongside firms such as Andreessen Horowitz and DST Global.
Databricks specialises in software that integrates, analyses, and facilitates the creation of AI applications using complex data from diverse sources. Its primary competitors include Snowflake and cloud infrastructure services like Microsoft’s Fabric.
