| LONDON, March 17
LONDON, March 17 Leveraged loan investors are
set to welcome two sizeable cross-border acquisition deals
totalling US$11.5bn, which will offer some relief from the raft
of refinancings that have dominated both the US and European
markets since the start of the year.
Banks have underwritten around US$6bn of debt financing to
back investment firm Vista Equity Partners’ acquisition of
Canadian fintech DH Corp (and the refinancing of
existing debt) as it combines DH with portfolio company UK
financial software provider Misys.
Meanwhile, lenders are preparing to launch a
US$5.5bn-equivalent leveraged loan to back UK software company
Micro Focus International’s acquisition of Hewlett
Packard Enterprise’s software business.
“The market has been crying out for big new deals and the
European market can absorb somewhere like €2bn per deal, so I
think they will provide a welcome fillip to the market,” a
syndicate head said.
The deals are expected to come at around the same time and
although one senior European loan banker said that could be
tantamount to a “head-to-head celebratory death match”, most
bankers are confident there is enough capacity to soak up both
The leveraged loan investor-base has been flooded with cash
from new and existing CLOs, warehousing CLOs and managed
Having seen a number of repricings and refinancings on
existing deals, investors are desperate to put new money to work
and access fresh paper.
“It would be nice to just have some paper to use new money.
The market is not even close to capacity and it still feels like
most supply is coming from small add-ons, refinancings and
recaps. Around 15 to 20 big fund managers are sitting on a lot
of cash and it feels like we need €15bn of new money to come to
market to soak up liquidity and normalise the technical dynamic
- and that is just in Europe,” a senior leveraged loan banker
Barclays, Citigroup and Morgan Stanley are leading the debt
financing on DH/Misys, alongside Nomura and Macquarie, which
joined the deal.
Some US$6bn of debt could include around US$4bn of senior
debt financing and around US$2bn of subordinated. The financing
will be mainly denominated in dollars but will include some
euros or sterling to take account of the company’s cashflows.
The financing could be solely in loans or could include both
loans and bonds.
A US$5bn term loan for Micro Focus will include around €1bn
for European investors. There is also a US$500m revolver. JP
Morgan has been joined by Barclays, HSBC and RBS on the deal.
(Editing by Christopher Mangham)