LONDON, June 5 (Reuters) - Banks are preparing to launch around €1bn of leveraged loans backing Advent International’s buyout of European industrial supplies distributor IPH that will combine with Advent-owned peer Brammer, banking sources said.
Advent agreed to acquire IPH from PAI Partners in May following its take private of Brammer in February.
BNP Paribas, HSBC, Goldman Sachs, Lloyds and Morgan Stanley are leading the debt financing, which is expected to be shown to a select group of investors this week before launching for general syndication, the sources said.
The financing comprises around €770m of senior loans and €130m of preplaced second-lien loans, as well as undrawn loans, the sources said.
Advent was not immediately available to comment.
It is the latest deal to include a preplaced second-lien loan in Europe, as sponsors circumnavigate banks to directly place junior debt with cash-rich funds, avoiding costly underwriting fees.
An approximate €570m-equivalent debt financing backing Advent’s acquisition of Danish packaging group Faerch Plast also includes a preplaced second-lien.
“Preplacing second-lien is the latest fashion and sponsors are doing it because they can. Borrowers have more control over loans than bonds. Second-lien is more attractive and flexible than a high-yield bond and they dont have call protection,” a senior banker said.
Advent took Brammer private earlier this year and the combination with IPH will create a European distributor of industrial supplies with over €2.1bn in revenues, according to an announcement. (Editing by Christopher Mangham)