The round, which is expected to close at the end of the week, is being led by TPG and Dragoneer Investment Group, according to the report. It would bring the total amount of money raised by Spotify so far to more than $2.5 billion.
Debt financing has the advantage that it doesn’t dilute Spotify’s stock value, which means that employees and other investors aren’t effectively losing any money on the deal. However, the deal may give a Spotify a more definitive deadline for a public offering, at which point the lenders would be able to convert their debt notes into stock.
Spotify revealed earlier this month that it now has 30 million paying customers. This makes it the market leader in a growing streaming industry, but its growth also comes at a price: Spotify continues to lose money, and may have to sketch out a clearer path toward profitability before it attempts to go public.