LONDON (LPC) - Around 11 banks are lining up US$3bn (£2.4 billion) of debt financing to back Bain Capital’s potential acquisition of WPP’s data analytics division Kantar, banking sources said.
WPP is in exclusive talks to sell a majority stake in Kantar to private equity firm Bain Capital, it said on July 1, in a US$4bn deal, following a heavily-contested auction process led by Goldman Sachs.
Banks expected to underwrite the deal include Bank of America Merrill Lynch, Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, Mizuho, Morgan Stanley, Natwest, Nomura and RBC, although the list is not yet finalised, the sources said.
The buyout is expected to be backed with US$3bn of senior leveraged loans and subordinated high-yield bonds, denominated in dollars and euros, the sources said.
Bain declined to comment.
Bain is opting for high-yield bonds over second-lien loans as bonds are perceived to be an easier sell to investors due to the more attractive call protection offered on them, giving certainty of investment.
Second-lien loans have been popular of late on buyout financings, especially when they are preplaced as they give certainty of funds. Yet high-yield bonds are making a comeback as investors accept competitive pricing to get back into the game.
“There has been a general lack of issuance in high yield and a lack of paper with yield on it. High-yield is in some ways more attractive to a broader investor base as it has call protection, which is an easier sell than second-lien that has limited call protection and a condensed buyer base. High-yield is attractive to borrowers as it should price tighter,” a senior banker said.
Bain’s interest in Kantar is the latest private equity deal to emerge in recent weeks. Blackstone and Lego’s founding family on June 28 took Merlin Entertainments private in a US$7.5bn deal, in one of the biggest private equity deals in Europe in recent years. It will be backed with £3.8bn of loans.
Nestle also said in May it was in exclusive talks to sell its skin health business to a consortium led by EQT Partners for SFr10.2bn (US$10.33bn). It is being backed with a SFr5.4bn-equivalent (US$5.5bn) jumbo financing.
Editing by Christopher Mangham