Apollo, Blackstone secure $35B debt package for Anthropic
What's the story
Apollo Global Management and Blackstone have secured a massive $35 billion financing package for Anthropic PBC. The move is aimed at bolstering Anthropic's artificial intelligence (AI) infrastructure. The deal, one of the largest private credit transactions ever, highlights the race among top-tier financiers to fund data center construction and their required chips. Tech companies are exploring all possible avenues in credit markets to meet AI's unprecedented capital demands.
Financial backing
Broadcom backs payments on largest senior portions of the debt
Under the deal, Broadcom has agreed to back payments on the largest senior portions of the debt. Morgan Stanley advised and helped arrange this transaction. Nearly half of the $35 billion debt was syndicated to other investors. This deal is a milestone for the emerging chip-financing market, which is expected to grow rapidly as new data centers create sustained demand for specialized hardware.
Tech collaboration
Broadcom to deploy over 20GW compute capacity by 2028
On Broadcom's earnings call this week, CEO Hock Tan revealed that the company is building an AI XPV platform with Apollo, Blackstone, and other leading investors. The plan is to deploy over 20 gigawatts (GW) of compute capacity by 2028. Tan said their strategic vision is to combine Broadcom's technology with investor partners having strong balance sheets to deliver sufficient compute capacity at the lowest cost for leading AI frontier labs like Anthropic and OpenAI.
Market debut
Anthropic files for confidential US IPO
The financing package comes after Anthropic's confidential US IPO filing. The company is trying to beat the rival OpenAI to a public market debut later this year. Last month, the Claude developer raised $65 billion in a funding round that valued the firm at $965 billion, including the new investment.
Financing details
A special-purpose vehicle raises capital
In this financing structure, a special-purpose vehicle raises capital through a mix of debt and equity to buy chips, which are then leased to a customer. The debt is mainly backed by the resulting lease payments and the unknown long-term value of the chips. The $35 billion debt facility was structured across three tranches, with Broadcom backing senior layers for lower borrowing costs aligned with its strong credit profile.
Deal features
Broadcom provides 'residual value support' agreement
Along with the debt, Apollo's Atlas SP Partners' structured-finance unit provided $800 million in equity. This makes it effectively the owner of the special-purpose vehicle (SPV). A key feature of this deal is Broadcom providing a "residual value support" agreement. Under this, if Anthropic defaults on lease payments for some time, the SPV will sell chips to repay debt investors. If chip values don't cover investor debts, Broadcom will compensate for any shortfall owed to A1 and A2 investors.