Bank of America provides Open AI with a $520 million credit line in hopes of securing a spot in the IPO
According to people familiar with the matter, The bank extended a $520 million credit line to OpenAI in recent weeks, after previously rejecting the artificial intelligence giant's request. The deal represents a significant change in attitude by the second-largest U.S. bank and its risk-cautious CEO, Brian Moynihan, toward artificial intelligence startups that are losing money but driving global market trends. As recently as last year, bank executives were skeptical that companies with such staggering capital expenditures could sustain their business models. However, people familiar with the matter said that OpenAI’s preparations for an initial public offering affected Bank of America’s decision. Bank of America, best known for its massive Merrill Lynch wealth advisers, would be seen as losing face if it missed out on such a massive U.S. stock listing. OpenAI has previously secured credit facilities from rival Bank of America, which increased its total available funding to more than $5 billion. Bank of America's slower adoption of OpenAI, the earliest AI company to gain global attention, than its peers highlights Moynihan's aversion to blind investment in corporate clients based solely on belief. He has long instilled this style in the management team through the concept of "responsible growth." One of the people familiar with the matter said that Bank of America gradually began to accept financing for artificial intelligence and related companies after confirming that the market would support the business models of such companies, even if they have not yet achieved profitability. Moynihan's management team also noted that investors were willing to support such companies at valuations that were not tied to underlying earnings, further bolstering their confidence. Representatives for Bank of America and OpenAI declined to comment. Bank of America still needs more time to conduct due diligence and allow credit decisions to complete its internal control process.