Databricks has taken a major step toward strengthening its financial position. The company behind the well-known data and analytics platform has raised $1.8 billion in new financing through the credit market.
This increases its access to capital at a time when the company is heavily investing in further scaling and investments in data and AI technology. The financing was confirmed by both Bloomberg and CNBC.
The financing consists of an extension of existing credit lines. For example, a previously agreed term loan has been significantly increased, and Databricks now has a much larger revolving credit facility than before. The loans have a relatively short term and are linked to variable interest rates, which indicates that the company sees the financing primarily as a flexible buffer and not as long-term debt.
Although Databricks itself has not commented on the transaction, parties involved indicate that the deal was supported by a combination of traditional banks and private lenders. This is in line with a broader trend in which fast-growing technology companies are increasingly organizing financing outside the public capital markets.
The move does not come out of the blue. Databricks is considered one of the most valuable private software companies in the world and is in the same playing field as major providers of data infrastructure and cloud analytics. At the end of last year, the company raised several billion dollars through a share issue, further increasing its valuation. Part of that capital was intended to provide employees with more liquidity through secondary share sales.
Debt financing as a strategy
Databricks has also been relying on debt financing for some time. About a year ago, the company closed a large credit deal, which at the time was considered the largest debt transaction in the company’s history. With the latest expansion, the total debt position now exceeds seven billion dollars.
With this combination of equity and loans, Databricks is clearly opting for maximum financial flexibility. As long as an IPO remains on hold, these types of structures appear to be an effective means of financing growth while accommodating employees and investors. For the technology sector, the deal shows how mature private credit markets have become for companies of this size.