June 21, 2017 / 1:20 PM / 3 months ago

LPC-Banks line up £525m financing to back Capita unit sale

LONDON, June 21 (Reuters) - Banks are lining up around £525m of debt financing to back a potential sale of Capita’s asset management services arm as final bids are due, banking sources said on Wednesday.

The British outsourcing group hired Goldman Sachs last year to launch an auction process for one of its units, Capita Asset Services.

Australian financial services firm Link Group and three buyout firms -- Chicago-based GTCR and European rivals CVC and BC Partners -- are all set to make offers, with final bids due on Wednesday, one of the sources said.

Banks are lining up debt financing packages to back the private equity bids and some £525m of debt equates to around 6.5 times Capita Asset Services’ approximate £70m Ebitda, including undrawn debt, the sources said.

The financing is expected to be offered in the form of senior term loans and subordinated second-lien loans, denominated in sterling and euros.

Capita declined to comment.

The sale of Capita’s asset services unit, which serves a wide range of financial institutions including wealth and asset managers as well as banks, could fetch between £700m-£800m and will help to reduce Capita’s debt burden, which stood at £1.7bn at the end of last year. (Editing by Christopher Mangham)

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