October 19, 2017 / 3:27 PM / a year ago

LPC-Europe's lev market set for €7.6bn of LBO loans

LONDON, Oct 19 (Reuters) - Another wave of event driven financings is set to hit Europe’s leveraged loan market in November promising at least €7.6bn-equivalent of new issuance for cash-rich investors before the end of the year.

Two of the higher profile deals are a US$2.59bn-equivalent loan financing backing Blackstone and CVC Capital Partners’ buyout of UK payment processing company Paysafe and around €2.5bn-€3bn of leveraged loans backing US private equity firm Hellman & Friedman’s DKr33.1bn (US$5.3bn) takeover offer for payments firm Nets.

Other deals include €1.6bn of debt financing to back BC Partners’ acquisition of German industrial ceramics group Ceramtec; €430m of leveraged loans to back CVC’s buyout of the remaining assets in Teva Pharmaceutical Industries’ women’s health business; and a £300m leveraged loan for Bain Capital’s acquisition of the UK divisions of human resources software company NGA Human Resources.

“We are back into the start of a leveraged buyout phase so we are looking at new deals,” a syndicate head said.

Europe’s leveraged loan market has been light on buyout financings throughout October after several post-summer leveraged buyout loans closed and allocated towards the end of September.

Since then, October has seen the return of refinancing and repricing activity, similar to what dominated the loan market for the first half of the year, as sponsors take advantage of a quiet spell to launch opportunistic loans.

Opportunistic deals are unpopular with bankers and investors alike as they offer low fees to the former and typically lower yields to the latter.

Some of the more opportunistic transactions include a €1.3bn-equivalent term loan for UK vehicle glass repair and replacement group Belron, to repay existing debt and fund a €450m dividend to shareholders.

A €630m repricing for Swiss shopping tax-refund company Global Blue effectively clipped 100bp off in interest, while Belgian aluminium systems manufacturer Corialis, Swiss packaging firm SIG Combibloc, French telecom group Altice and its subsidiary SFR all completed repricings or refinancings in October.


Meanwhile the pipeline of potential deals that could come to the market towards the end of the year or beginning of 2018 is also looking healthy as bids go in on a variety of assets.

Some of the most hotly anticipated auction processes include the sale of the margarine and spreads business of Anglo-Dutch consumer group Unilever, which would require up to €5bn of debt financing.

New deals are likely to be welcomed by investors, as CLOs, warehousing CLOs and managed accounts continue to scramble to put money to work amid an on-going imbalance between demand and supply that has plagued Europe’s leveraged loan market since last year.

New deals are popular as they boost portfolio diversity and tend to be more generously priced than opportunistic financings.

Yet questions remain whether the terms of the new deals will be more favourable for investors, specifically with regards to documentation, after pushback on a number of recent event-driven financings including life sciences company Avantor’s buyout of lab supplies company VWR Corp led to more lender-friendly docs.

Editing by Christopher Mangham

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