Strong ties: A file picture of executives of Adevinta celebrating the firm’s first day of trading at the Oslo stock exchange in April 2019. Blackstone and Singaporean sovereign wealth fund GIC are among the biggest lenders in the buyout deal. — Reuters
OSLO: Private credit funds are providing a record €4.5bil (US$4.9bil) loan to back the buyout of Adevinta ASA, marking the latest win for a market that’s increasingly become the go-to funding source for private equity firms.
The Canada Pension Plan Investment Board, Blackstone Inc’s credit unit and Singaporean sovereign wealth fund GIC are among the biggest lenders in the deal, people with knowledge of the matter said.
Intermediate Capital Group Plc, Arcmont Asset Management, Sixth Street Partners, and the asset management arm of Goldman Sachs Group Inc are also top-tier participants, the people said, asking not to be named because the information is private.
They’re providing the funds to a private equity-consortium led by Permira and Blackstone, which offered to purchase Adevinta in a deal that values the European classifieds company at about €14bil, including debt. The buyout loan is structured as a unitranche, a blend of senior and subordinated debt that’s popular among private credit lenders.
At current exchange rates, it tops a US$4.8bil unitranche loan for Finastra Group Holdings Ltd that a separate group of lenders inked a few months ago.
Adevinta is also receiving a €250mil revolving credit facility, bringing the total size of the financing to €4.75bil, some of the people said.
Finastra’s overall financing package was slightly larger at US$5.3bil, including a US$500mil revolver.
The lender group for Adevinta also includes PSP Investments, Apollo Global Management Inc, Blue Owl Capital Inc, Caisse de Depot et Placement du Quebec, Oaktree Capital Management and Oak Hill Advisors, the people said.
Representatives for Permira, Blackstone, CPPIB, GIC, ICG, Arcmont, Sixth Street, Goldman, Apollo, Blue Owl and Oak Hill declined to comment. Spokespersons for PSP, CDPQ and Oaktree didn’t immediately respond to requests for comment.
The record unitranche further demonstrates the US$1.6 trillion private credit market’s significance for buyout funding.
The industry has proven to be a viable alternative to the syndicated high-yield bond and leveraged loan markets, especially since interest rates began to rise.
In Adevinta’s case, banks actively competed with private credit firms to underwrite the massive financing and sell it down to investors.
But the proposal from banks was less appealing in part because they weren’t keen to offer a package entirely denominated in euros due to the weakened state of the European leveraged loan market, Bloomberg previously reported.
The unitranche was issued at 5.75 percentage points over the Euro Interbank offered rate and at a discounted price of 98 US cents on the dollar, according to some of the people.
That compares with a rate of 7.25 percentage points over the US benchmark for Finastra. — Bloomberg
