(Bloomberg) — Banks and private credit firms are competing to provide debt financing for a potential 2.2 billion-euro ($2.4 billion) sale of IVIRMA Global, a chain of fertility clinics.
KKR & Co., Cinven Ltd., Nordic Capital and Carlyle Group Inc. are among buyout firms that have expressed interest in acquiring the Spanish company, according to people familiar with the matter. Cinven and U.S private equity firm Amulet Capital have discussed teaming up, two of the people said.
Second-round offers are due next week, they said, asking not to be identified because the talks are private. Representatives for the buyout firms declined to comment.
The transaction could be one of the first big debt deals to come to market since Russia invaded Ukraine in late February. It also shows how private credit is trying to move into larger transactions, which would have traditionally been handled by the syndicated loan market.
Some private equity sponsors chose to run a dual-track financing process for their IVIRMA bids, according to people involved, asking for both bank and private credit options, to consider which may be more attractive.
Direct lending can bring speed and certainty of funding, seen as especially valuable in volatile, uncertain markets. But in return, they often sacrifice competitive pricing and rely on fewer lenders.
Banks in Europe’s leveraged loan market are sitting on $37 billion pending debt deals after the market froze in late February. While activity is starting to thaw, Europe’s high-yield bond market however is still closed.
Private credit, on the other hand, has continued to snap up financial deals, despite the volatility. Awash with cash to put to work, direct lenders are seeking to fund up to 3 billion pounds for U.K. software business The Access Group, in what would be Europe’s largest private credit deal to date.
Details of the IVI bidding process so far:
Banks:
- Banks involved in the bidding process are looking to provide funding of around 975 million euros for private-equity bids, the people said. That comes to 7.5x IVI’s Ebitda of about 130 million euros.
- At that multiple, senior leveraged loans and subordinate debt would be offered, they added.
- Other banks are offering an all-senior loan package of around 6.5x Ebitda, totaling 845 million euros.
- Morgan Stanley has offered staple financing for any of the bidders.
Direct Lenders:
- Direct lenders, including Blackstone, are weighing an offer of up to 1.6 billion euros of debt financing, equating to around 12x debt to earnings.
- Direct lenders also considering providing junior debt options in addition to senior bank financing
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
