LONDON May 5 Over €20bn of leveraged loans from
25 deals could hit Europe’s leveraged loan market in the coming
months as the pipeline of buyouts gathers pace, offering bankers
the lucrative underwriting they’ve been waiting for and
investors the chance to put new money to work.
Europe’s leveraged loan market has had some new issuance of
late, including deals for UK software companies Misys and Micro
Focus, but this has done little to satisfy the appetites of
bankers and investors who have been desperate for event-driven
financings after a splurge of repricings and refinancings since
With so much liquidity and demand for new paper, bankers are
feeling fairly confident on imminent syndications. These include
a €1.95bn term loan B backing the buyout of German drugmaker
Stada; €393m equivalent of term loans backing
UK-based Element Materials Technology’s acquisition of British
laboratory-based testing firm Exova Group, which forms part of a
wider US$1.5bn financing; and a euro portion of a
€2.5bn-equivalent leveraged loan financing for Hong Kong-based
international schools operator Nord Anglia Education.
And more buyout loans are on the horizon as bankers prepare
staple financings for a number of auction processes, promising
more lending activity if private equity firms win out.
“It is a bit nerve-racking but it is also exciting. The
pipeline is pretty full with lots of deals that could happen and
the market is ready for them,” a senior banker said.
Some of the larger deals could include around €3bn for
German metering group Ista; over €4bn for Anglo-Dutch consumer
group Unilever’s margarine and spreads business; €1.2bn
for French drug maker Sanofi’s generic drugs business;
€1bn for French nursing home company DomusVi; US$1bn for
Swiss-based smart meter group Landis+Gyr; and US$1.5bn for US
herbal supplement maker Nature’s Bounty.
PLENTY TO GO AROUND
A number of the financings could start to hit the market in June
and despite the large sums of cash needed to back the buyouts,
there is a consensus among lenders that the leveraged loan
market has the capacity.
While the large number of deals is unlikely to reverse the
technical dynamic of supply/demand imbalance, it is possible
they will slow down the non-event-driven transactions as
sponsors turn their attentions away from improving the debt of
portfolio companies and investors focus their energy on the new
paper in the market.
“The market is pretty constructive: if all the buyouts come
to fruition, a steady flow of deals will attract more funds to
the market and they will get sold,” a second senior banker said.
A third banker added: “Investors will have more confidence
to push back on refinancings and repricings if new deals
continue to come to the market. If they get yanked from existing
deals, they will just have more money to invest in new paper.”
Bankers are also working on financings under €1bn for the
potential sales of cleaning services company Safetykleen Europe;
Sanofi’s European contract manufacturer business Cepia; Danish
packaging group Faerch Plast; IT and outsourcing firm Civica; UK
human resources software company NGA Human Resources; Deutsche
Post’s British outsourcing subsidiary Williams Lea; and British
retailer The Body Shop, among a number of others.
(Editing by Christopher Mangham)