As cloud storage company Box eyes a public offering in the coming weeks, its No. 1 (and similarly named) competitor, Dropbox, is not far behind.
Dropbox this week secured a line of credit from bank lenders, according to people familiar with the deal, as a precursor to its eventual IPO.
The San Francisco-based storage company had been discussing a credit line of around $500 million with banks for several weeks, though the final deal, sources said, could be higher.
A spokesperson for Dropbox declined to comment.
In recent years, emerging tech companies looking to go public have opted to build a capital structure to a more mature company before doing so.
A month before Twitter's November 2013 offering, it put a $1 billion credit facility in place.
Earlier in March, music streaming service Spotify finalized a $200 million credit line—even though its IPO may yet be several months away. It's advantageous to create a source of backup liquidity before trading publicly—especially while debt is cheap.
For banks with balance sheets looking to lend to growth companies, it's a way to earn duties as an underwriter in the offering, too.
When Facebook needed a large syndicate to put forth $8 billion total in a bridge loan and credit facility in March 2012, it extended spots to a number of financial firms—like Citigroup, Credit Suisse and Deutsche Bank—to distribute some stock, too.
A win-win for banks that had not built long-standing relationships with the company.
The full slate of banks in the Dropbox deal could not be learned.
Previously, sources said Dropbox would likely trade publicly before the end of 2014—with a credit facility in place, many are asking whether that date may come sooner.