Apollo Global Management Inc. and Blackstone Inc. have successfully concluded a $35 billion financing deal for Anthropic PBC. This substantial package is aimed at funding Anthropic's expansion of its AI infrastructure, specifically allowing it to lease custom chips from Google. This marks a significant transaction in the competitive artificial intelligence sector.
The debt financing is structured into three tranches. The largest senior portions, comprising $6 billion in A1 notes and $24 billion in A2 notes, are backed by Broadcom Inc. This backing helps secure lower borrowing costs due to Broadcom's strong credit profile, with these notes receiving private ratings in the mid-investment grade tier. The A1 notes are priced at a 5.75% coupon, with buyers of the A2 tranche including institutional investors like Apollo's Athene insurance arm. A third tranche, consisting of $4.5 billion in B notes, does not have Broadcom's backing and sold with an 8.5% coupon at par.
Broadcom's involvement includes a "residual value support" agreement. This means that if Anthropic struggles with lease payments over a certain period, a special purpose vehicle (SPV) will sell the chips to repay debt investors. Should the proceeds from the chip sales be insufficient to cover the A1 and A2 notes, Broadcom will cover the shortfall, ensuring 100% of the value owed to these investors. Apollo's Atlas SP Partners formed the SPV for this investment and is also an investor across various note tranches.
This deal represents a key development in the emerging chip-financing market, which is anticipated to grow rapidly as demand for specialized hardware for new data centers increases. The transaction is expected to be one of many for Broadcom, which is collaborating with Google on developing the tensor processing units (TPUs) involved. The financing package also closely follows Anthropic's confidential US IPO filing, as the company aims for a public market debut later this year, having recently raised $65 billion in a funding round that valued it at $965 billion including new investments.
