Americans may not get loans. LBOs? They’re fine
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Jonathan Guilford
NEW YORK, March 17 (Reuters Breakingviews) -It’s about to get harder for average Americans to get a loan. Silicon Valley Bank’s failure has regulators looking at how to toughen rules on banks that might restrict them, and small- and mid-sized institutions are going to take a more discerning eye at new business. But for firms like Apollo Global Management APO.N and Blackstone BX.N, there’s no such thing as a banking crisis. This week, traditional loans offered to leveraged buyouts had something of a comeback.
Following SVB’s collapse, U.S. Federal Reserve supervision chief Michael Barr is reviewing whether banks with under $250 billion in assets – the current threshold for more stringent regulation – should come in for tougher oversight and higher capital requirements, Reuters reported. As share prices of regional banks swoon and executives batten down the hatches, it all adds up to less lending capacity at Main Street branches across the country.
While mom-and-pop businesses might have a tougher time getting a loan, though, Wall Street’s buyout barons suddenly have renewed access to their credit cards. A recent deep freeze in leveraged loan markets left private equity firms unable to secure the debt that makes their deals work – until this week. Three major buyouts, led by private equity titans Blackstone, Apollo and Silver Lake Partners, all managed to tap banks for financing.
Blackstone and Silver Lake’s deals – the $4.6 billion acquisition of web-conference software maker Cvent CVT.O and $12.5 billion buyout of survey company Qualtrics International XM.O, respectively – both nabbed only $1 billion in financing. Both also got extra help, with a Canadian pension fund ponying up nearly $2 billion alongside Silver Lake, while Vista Equity Partners, which held a majority of Cvent, co-financed its deal with a preferred investment. That’s not quite business as usual, but it makes sense: These are deals for relatively low-profit technology firms, both coming in at a price of well over 30 times the target companies’ expected EBITDA this year, according to Refinitiv.
Apollo’s $8.1 billion deal for chemicals distributor Univar Solutions UNVR.N, however, looks more like a return to the norm, with over $4 billion in debt from a syndicate of nine banks. That’s despite financial system mayhem rocking overall lending markets, with the cost of some high-yield debt shooting up by roughly a percentage point over interbank rates since March 6. Belts are tightening everywhere, except for finance’s masters of the universe.
Follow @JMAGuilford on Twitter
CONTEXT NEWS
Private equity firm Silver Lake Partners announced on March 13 that it had agreed to acquire experience management software company Qualtrics International for $12.5 billion, in a deal supported by $1.8 billion in equity from the Canada Pension Plan Investment Board and $1 billion in debt financing.
On March 14, Blackstone announced the acquisition of meetings technology provider Cvent for $4.6 billion including debt. Vista Equity Partners, Cvent’s majority owner, will invest a portion of its proceeds from the sale in non-convertible preferred stock financing, while banks are providing a further $1 billion in debt.
The same day, Apollo Global Management said it would purchase chemicals and ingredients distributor Univar Solutions for $8.1 billion. Abu Dhabi Investment Authority will invest in a minority stake. Nine banks, led by JPMorgan, are providing debt financing of over $4 billion, sources close to the deal told Breakingviews.
Editing by Lauren Silva Laughlin, Sharon Lam and Amanda Gomez
Activos relacionados
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.
