Alternative Investing Report - January 15, 2025

*as of 1/14; Sources: S&P, BTC, FTSE, DJRE, CL50

The AI and data software startup Databricks raised $5 billion in debt financing, from lenders such as Blackstone, Apollo Global Management, and Blue Owl Capital, tapping the private credit market for capital. The deal also includes a $2.5 billion revolving credit facility provided by a group of banks. This follows a $10 billion venture round in December, which valued the company at $62 billion, and gave early employees the chance to cash in their equity shares.

➨ TAKEAWAY: Databricks has often been mentioned as a potential IPO candidate, but with $15 billion in fresh capital an IPO seems unlikely to happen anytime soon. The company hit $3 billion in annualized revenue and a sales increase of 60% in the previous quarter, numbers that are sure to be attractive to Wall Street. Though there is hope that the IPO market will be more active this year, Databricks has shown that for highly desirable private companies, private credit is also an option to access liquidity.

In the newest episode of Smart Humans, Slava Rubin talks with Vincent’s Adam Katz about the year in alts, and what to expect in 2025 in real estate, pre-IPO venture, art, collectibles, and crypto.

Farmland investment platform AcreTrader released its 2025 outlook for farmland, which highlighted both the shrinking supply and growing investor demand for the asset class. Farmland values rose in 2024, despite lower commodity prices and higher interest rates, though the rate of appreciation has slowed from the previous few years. Though there are concerns about the incoming administration’s policies and potential tariffs, Trump’s policies during his first term were generally viewed as a positive by farmers.

➨ TAKEAWAY: Farmland is a long-term asset that generally produces steady returns, and showed strong performance in prior years due to its position as an inflation hedge. When inflation causes prices to rise, crop prices rise, and farmers benefit. With inflation lowered, crop prices have fallen, which has led to the slowing rate of appreciation. However, high-quality farmland is still very much in demand heading into 2025.

🪙 Crypto bounceback: After a rough start to the year, the crypto market rebounded, with Bitcoin passed the $97,000 mark, rising nearly 8% from its low point the day before. Speculation about incoming President Trump’s potential pro-crypto executive orders next week could have been the catalyst, as many are anticipating an “inauguration bump.”

🏡 Hottest housing markets: Rockford, IL took the top spot from Manchester, NH in Realtor.com’s latest rankings of the hottest U.S. housing markets, based on the length of time listings spend on the market and how much interest the average listing receives. All top 20 markets are located in the Northeast or Midwest, with Southern markets ranking the lowest.

🚀 Verdiva Bio fundraise: In what is the largest biotech Series A in UK history, Verdiva Bio raised $410 million as it looks to create a drug to compete with Ozempic and Wegovy in the GLP-1 weight-loss sector.

🎸 Jeff Beck guitar auction: Next week, Christie’s is auctioning off the iconic rock guitarist’s collection, which includes a 1954 Gibson Les Paul estimated to fetch between $425,000 - $610,000.

🏢 UK AI infrastructure: Three tech companies are committing $14.3 billion to build out data centers in the UK in order to build out the country’s AI infrastructure, which shows the AI boom is not limited to the U.S.

🏡 Home sales fall: While some early indicators of homebuying demand are up, such as home tours and Google searches, pending home sales are down 3.1% year-over-year, the biggest decline since September, as mortgage rates hit a seven month high.

One of the biggest winners in the crypto world since the November election has been Ripple (XRP), which is up nearly fivefold in value, and stands to benefit from the change in leadership at the SEC. It seems likely that the civil case the SEC brought against Ripple back in late 2020 and that resulted in a $125 million judgment will be dropped once current head Gary Gensler resigns next week. There is a deadline for the SEC to appeal an element of the case today, and traders have been anticipating a legal win for Ripple, causing its price to rise the most out of any token in the top-40 by market cap in the last week.