Banks Kick Start $2.9 Billion Bond Sale for Worldpay Buyout

Banks including Goldman Sachs Group Inc. and JPMorgan Chase & Co. kicked off the sale of $2.9 billion of bonds to fund GTCR’s purchase of a majority stake in payment processor Worldpay Inc., a key test of investor appetite for risky debt to finance leveraged buyouts.

(Bloomberg) — Banks including Goldman Sachs Group Inc. and JPMorgan Chase & Co. kicked off the sale of $2.9 billion of bonds to fund GTCR’s purchase of a majority stake in payment processor Worldpay Inc., a key test of investor appetite for risky debt to finance leveraged buyouts. 

The banks will hold a call for investors Monday at 3 p.m. UK time, with pricing of the senior secured notes targeted for Wednesday, according to a person with knowledge of the sale, who asked not to be identified as the information is private. The sale is split across two tranches of $2 billion and £700 million ($866 million) and follows the launch last week of a $5.5 billion package of leveraged loans in dollars and euros.

Read more: JPMorgan, Goldman Line Up $9 Billion of Debt for Worldpay Buyout

Private equity firm GTCR in July agreed to buy a 55% stake in payment processor Worldpay, the Fidelity National Information Services Inc. unit that handles card payments for global businesses, valuing the company at $18.5 billion. FIS will retain 45%.

The buyout financing is the largest since Wall Street agreed to lend $13 billion to help fund Elon Musk’s takeover of Twitter last year. Market players are watching the progression of the sale carefully, as a successful syndication could help spur a rebound in mergers and acquisitions, potentially leading to more jumbo deals. 

Read more: Once Shunned Loans Are Now a Market Darling: Credit Weekly

The $2 billion tranche of bonds is being offered with initial price talk in the high 7% area, while the £700 million notes are offered at a yield in the high 8% area.

The underwriting was the clearest sign yet of a nascent return to risk-taking by banks that have cleared, albeit at huge losses, much of the commitments stuck on their balance sheets since last year.

Arrangers had invited both euro and dollar investors to a pre-marketing process for the debt offering prior to the launch of both the bond and loan. 

Banks have found a good window for the deal: The junk debt bond market has sprung back to life on the prospect that central banks will be able to contain inflation without triggering a painful recession. There’s also a technical tailwind: The lack of M&A supply this year means that investors have built up cash piles that they’re now looking to put to work. 

Banks have seized on the recent uptick in sentiment to bring refinancings from higher-rated issuers, among with other more opportunistic deals. Banks also kicked off marketing Monday for a €600 million leveraged loan backing PAI Partners’s acquisition of a majority stake in Infra Group.

Here’s a breakdown of the Worldpay deal tranches:

 

(Updates details throughout, adds table. An earlier version of this story corrected timing of takeover agreement in third paragraph.)

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