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Home Themes Private Credit

Private Credit Emerges as Key Funding Source for Tech Giants Amid IPO Slowdown

by Team Lumida
January 24, 2025
in Private Credit
Reading Time: 3 mins read
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Key Takeaways:

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• Blackstone leads $4 billion loan for Clario and participates in $2.75 billion Databricks financing
• Private lenders offer flexibility through revenue-based loans versus traditional earnings-based metrics
• Companies using private credit to provide employee liquidity while delaying IPOs
• Hybrid financing model emerging with private credit and bank participation

What Happened?

Private credit lenders are increasingly financing large technology companies preparing for eventual public offerings. Recent notable deals include Blackstone’s $4 billion loan to Clario and a $2.75 billion term loan to Databricks, backed by multiple lenders including Apollo and Blue Owl Capital. These deals often feature revenue-based lending metrics and provide liquidity solutions for companies choosing to remain private longer.

Why It Matters?

This trend represents a significant shift in pre-IPO financing dynamics. Private credit’s growing role addresses a crucial market gap, offering flexible financing terms that traditional banks cannot match. The arrangement benefits both sides: tech companies gain access to capital without equity dilution while maintaining IPO optionality, and private lenders secure relationships with high-growth companies. This evolution in financing structure could reshape how technology companies approach their growth and liquidity needs before going public.

What’s Next?

Investors should monitor several key developments: the pace of IPO market recovery under the Trump administration; potential shifts in financing costs as companies transition from private credit to public markets; the evolution of hybrid financing models combining private credit and bank facilities; and the impact on company valuations and exit strategies. While the IPO window may be opening, private credit lenders expect continued demand for their services, suggesting this financing trend could become a permanent feature of the tech funding landscape. The market will also watch how successfully companies manage the transition from private credit to public market financing post-IPO.

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© 2025 Lumida Wealth Management LLC is an SEC registered investment adviser. Privacy Policy. Cookies Policy.
Disclaimer Important Information This site is for informational purposes only. Information presented on this site does not constitute as investment advice.

Lumida Wealth Management LLC (‘Lumida”) is an SEC registered investment adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability.

Lumida's website (referred to herein as the "Website") is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of the Website on the Internet should not be construed by any client and/or prospective client Lumida’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.

Any subsequent, direct communication by Lumida with a prospective client will be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides.

‍Lead Capture Forms: By submitting your contact information in the forms on this site, you are not obligated to invest in Lumida's product or services.
‍Address: Lumida Wealth Management, 25 W 39th Street Suite 700, New York, NY 10018