Vista Puts Up $1 Billion Equity to Lure Private Credit to Finastra Deal

Vista Equity Partners is offering to pump $1 billion of preferred equity into its portfolio company Finastra Group Holdings Ltd. in an effort to get a multi-billion dollar refinancing over the line after months of haggling with potential lenders.

(Bloomberg) — Vista Equity Partners is offering to pump $1 billion of preferred equity into its portfolio company Finastra Group Holdings Ltd. in an effort to get a multi-billion dollar refinancing over the line after months of haggling with potential lenders.

The package also includes a $4.8 billion private credit loan, according to people with knowledge of the matter who declined to be identified discussing a private transaction. That would make it one of the largest direct-lending deals on record.

Oak Hill Advisors is expected to be among the lead lenders, the people added. Other firms including Sixth Street Partners, Ares Management Corp., Blue Owl Capital Inc. and KKR & Co. have been looking at participating in the debt package, Bloomberg previously reported.

It’s the latest example of a private equity firm contributing fresh equity in a portfolio company as rising interest rates have made large debt loads expensive and more difficult to support in an uncertain economic environment.

The equity injection would allow Vista to limit the amount of new debt it needs to raise for the financial-software provider, down from the nearly $6 billion it originally targeted, which would have made it the largest private credit deal on record. But the riskiest second-lien segment, originally intended to be between $1.5 billion to $2 billion, struggled to come together.

Representatives for Vista, Oak Hill, Sixth Street, Ares, Blue Owl, and KKR declined to comment. Representatives for Finastra did not immediately respond to requests for comment.

Vista’s preferred equity is structured as payment in kind, meaning the interest would be paid by increasing the principal amount, the people said.

The private credit loan is being discussed at 750 basis points over the Secured Overnight Financing Rate and a discounted price of 97.5 cents on the dollar, the people said.

–With assistance from Davide Scigliuzzo.

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