ByteDance secured a $29.6 billion loan from nearly 30 banks on Friday.
The Chinese social media giant’s bet on AI development sparked strong interest from lenders, making it the second-largest loan made in Asia this year after SoftBank raised $40 billion in March to boost OpenAI investments, highlighting lenders’ enthusiasm for the industry that demands ever-increasing capital.
Banks from China, the United States, Europe, and Singapore are taking part in the funding, with Citigroup coordinating the three-year loan and JPMorgan that ByteDance is expected to sign soon.
The owner of the well-known social media applications Douyin and TikTok upped the facility from an initial aim of $20 billion following an enormous reaction from lenders.
One of them said that more than 60% of the total has been subscribed to by Chinese banks.
Lenders were informed by ByteDance that the funding would be used for general corporate purposes and that the money would primarily boost the company’s AI-related initiatives.
The facility has a three-year initial tenure with possibilities to extend for an additional two years.
UNSECURED RARE MEGA LOAN
ByteDance has increased its investment in AI.
The tech company was mulling a similar arrangement with Baidu and was in talks with Shanghai-based Iluvatar CoreX to buy AI chips for inference work.
Because ByteDance is not committing any assets or shares as collateral for the new dollar-denominated facility, lenders have confidence in the company’s creditworthiness.
One of the insiders stated, “It is extremely uncommon to see such a massive loan unsecured.” “The banks practically are counting purely on ByteDance’s name.”
ByteDance is the offtaker for numerous data centers being constructed in Southeast Asia, and the loan will be utilized to finance projects outside of China.
A data center and an offtaker enter into a legally binding agreement to purchase a specific portion of the center’s capacity.
According to Lian Jye Su, chief analyst at research firm Omdia, ByteDance is competing with both local hyperscalers in AI data centers and global hyperscalers in multimodal AI models.
Both need significant financial outlays, particularly when considering the capital expenditures made on AI training by companies like Google and OpenAI,” he stated.
ByteDance raised $10.8 billion from about 20 foreign and Chinese lenders when it last entered the global loan market in September 2024.
