Private credit behemoths Oak Hill Advisors and Blue Owl Capital are leading a group of lenders on the record-setting $5.3 billion loan package to help Vista Equity Partners refinance Finastra Group Holdings Ltd.’s debt, according to people with knowledge of the matter.
(Bloomberg) — Private credit behemoths Oak Hill Advisors and Blue Owl Capital are leading a group of lenders on the record-setting $5.3 billion loan package to help Vista Equity Partners refinance Finastra Group Holdings Ltd.’s debt, according to people with knowledge of the matter.
There are between 15 to 20 lenders providing the loan. Along with the Oak Hill and Blue Owl, Ares Management Corp., HPS Investment Partners and Oaktree Capital Management are holding the largest chunk of the loan, said the people, who asked not to be named because they aren’t authorized to speak publicly. Other lenders include Carlyle Group Inc. and KKR & Co., the people said.
Representatives for Oak Hill, Ares, HPS, Carlyle, Vista and KKR declined to comment. Representatives for Oaktree and Blue Owl didn’t respond to requests for comment.
The loan financing includes a $4.8 billion unitranche — which is a blend of senior and subordinated debt — and a $500 million revolver. Vista is providing $1 billion of preferred equity that will be payment-in-kind, which means Finastra will be able to pay that portion of its interest with additional debt.
The financing deal — which is set to include the biggest US loan provided by direct lenders — underscores the growing presence of private credit firms within the buyout arena. The process to refinance Finastra’s debt did face some hurdles, with Vista initially struggling to garner enough interest for a riskier segment of the loan. That changed when the private equity sponsor pledged to pump preferred equity and revised the loan structure.
Because of robust demand the unitranche ended up getting, Finastra was able to slash pricing on it to 725 basis points above a key benchmark rate, with a discounted price of 98 cents on the dollar, according to the people. The loan was previously discussed at 750 basis points above the key benchmark rate and a discounted price of 97.5 cents on the dollar.
The financing was oversubscribed, which meant that lenders didn’t get the full amount of the orders that they submitted. Some were cut back as much as 50%, the people said.
Allocations went out Tuesday. The financing deal is expected to wrap up in a few weeks and the funds will pay down Finastra’s existing debt in the US and European leveraged loan market, the people said.
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