(Bloomberg) — U.K. software business The Access Group is approaching direct lenders for what would be the largest debt package to date for the private credit industry in Europe.
The company is seeking to borrow around 2 billion to 3 billion pounds ($3.95 billion) to refinance 1.7 billion pounds of existing debt and to facilitate acquisitions, according to three people familiar with the matter who were not authorized to speak publicly.
Europe’s leveraged-loan and high-yield bond markets are all but shut due to the volatility caused by Russia’s invasion of Ukraine, but private credit continues to grow at a breakneck pace. Direct lending funds have extensive liquidity seeking investment options and offer borrower speed and certainty of execution, both particularly attractive in the current climate.
One of The Access Group’s private equity backers, HG Capital, declined to comment. The company itself and TA Associates, another private equity sponsor, didn’t immediately respond to a request for comment.
“It is well documented that the private credit market has been disruptive around the traditional syndicated loan space over recent years,” said Jeremy Duffy, a London-based finance partner at law firm White & Case. “Thus far into 2022, direct lenders appear to remain very active and to be growing market share.”
At the end of February, Warburg Pincus tapped the private credit market to fund its 1.7 billion pound takeover of Informa Plc’s Pharma Intelligence Unit. Earlier this month Bloomberg reported that direct lenders were prepping a record $5 billion loan for Zendesk Inc, an enterprise software company.
“We may see some market share shift, even for large deals, to direct lenders as direct lenders can offer greater certainty of execution on final terms in these market conditions,” said Michael Curtis, head of private credit strategies at Fidelity International.
Even so, a 2 billion to 3 billion pound trade will test the European market’s depth — particularly as the deal is primarily set to be done in sterling. One of the people familiar with the matter thought that Access Group would be asking lenders to stretch to at least 500 million pounds to get onto the deal.
Prospective Lenders
As a well known, strong performing credit, it is expected to attract significant attention from the major private credit funds, two of the people said.
Access Group already has private credit in place, according to two of the people, and is keen to stick with the direct lending market, as opposed to tapping the syndicated market, which would be more typical for a deal of this size.
Headquartered in London, The Access Group provides business management software to U.K. medium-sized businesses like food chain Itsu Ltd and auto firm Jaguar Land Rover Plc. It also provides similar services to companies in the Asia Pacific region. HG-Capital invested in the business in 2018, alongside existing investor TA Associates, giving it an enterprise value at the time of 1 billion pounds.
Prior to Access Group, the largest European private credit deals to reach the market came from The Ardonagh Group, which raised 1.8 billion pounds from Ares, HPS and KKR among others in June 2020.
FNZ, a wealth management platform in London, also raised a 1.5 billion pounds in November last year with HPS, Arcmont, Goldman Sachs Asset Management and Hayfin.
(Adds no comment/decline to comment from Access Group and PE backers in fourth graph)
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