Waymo, the self-driving unit of Alphabet (NASDAQ: GOOGL), said today it has closed a $5bn term loan, the first time it has borrowed. The money is meant to expand its robotaxi service in the US and abroad.
A term loan is a fixed sum repaid on a schedule. Until now Waymo has relied on equity, meaning sales of ownership stakes, including a $16bn raise in February at a $126bn valuation, led by Dragoneer, DST Global and Sequoia Capital. Alphabet remains the majority investor.
Alphabet shares traded at $346.645 in New York on Thursday, down 1.1% from the previous close of $350.50. The loan sits at Waymo level, and nothing in the reporting shows it drove the fall.
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PIMCO, Blackstone and Sixth Street were lead syndicated lenders, meaning members of a group sharing one loan. Goldman Sachs was sole lead bookrunner, the bank that ran the syndication. Waymo named Capital Group, Loomis Sayles and T. Rowe Price as significant lenders.
The cash backs a growing footprint. Waymo launched in its 15th US city last month and has announced an expansion to Singapore. It is also testing in London and Tokyo, with plans to launch there.
A Waymo spokesperson said the financing would help the company:
capitalize on the significant opportunities ahead, especially as a scaling business with proven commercial demand and improved road safety outcomes in the communities in which we operate.
Waymo spokesperson
Regulators are scrutinising Waymo’s safety record. The US road-safety regulator NHTSA has opened probes into how Waymo robotaxis behave around school buses and into a collision with a child, which caused minor injuries at about 6mph. The transport accident investigator NTSB has opened its own investigation.
The loan adds outside debt to a funding mix that had been parent and outside equity. For Alphabet shareholders it is a story about how the autonomy business is financed, not a catalyst for today’s price move.
