"Super unicorn" Databricks secures $5 billion in private credit and bank financing, valuation rises to $62 billion.

According to informed sources, software manufacturer Databricks Inc. has secured over $5 billion in financing from lenders including Blackstone Group, Apollo Global Management, and Blue Owl Capital Inc., marking its largest debt financing to date. Dubbed a "super unicorn," Databricks is one of the world's most valuable privately-held companies. Last year, the company hired JPMorgan Chase to arrange financing and planned to use the funds to offset tax burdens from employee stock sales. This debt deal coincides with Databricks' announcement of a $10 billion equity financing at the end of last year, boosting its valuation to $62 billion. Sources revealed that direct lending institutions will provide $22.5 billion in term loans and a $5 billion delayed draw loan, which Databricks can tap into later. They stated that the structure of this debt is tied to the company's Annual Recurring Revenue (ARR), with interest rates paid being 4.5 percentage points higher than secured overnight financing rates. Informed sources disclosed that banks including JPMorgan Chase, Barclays, Citigroup, Goldman Sachs, Morgan Stanley, and BNP Paribas have provided a $25 billion revolving credit facility as part of the debt financing. ARR loans have become a popular channel for private lending firms to provide loans to fast-growing software companies that are not yet profitable. In ARR loans, creditor protections are based on a company's recurring revenue (typically based on long-term contracts rather than revenue). Databricks stated in December last year that it expects ARR to exceed $3 billion and generate positive free cash flow in the fourth quarter ending January 31. Sales in the first three months grew by over 60%, with the company expanding rapidly while many software manufacturers struggle with growth. The company stated that it will use the proceeds from the $10 billion equity financing to develop new AI products, make acquisitions, significantly expand its international market business, and buy shares held by current and former employees. Thrive Capital, along with companies like Andreessen Horowitz and DST Global, led this round of financing. Databricks develops software to extract, analyze, and build AI applications using complex data from various sources. Some services provided by cloud infrastructure providers like Snowflake and Microsoft's Fabric are often seen as its main competitors.