May 23, 2017 / 3:47 PM / 2 months ago

LPC-Nord Anglia sounds out investors on LBO financing

3 Min Read

LONDON, May 23 (Reuters) - Investors are being consulted on a US$2.2bn-equivalent debt financing backing the acquisition of publicly-listed Hong Kong-based international schools operator Nord Anglia Education, banking sources said.

Nord Anglia said it would be taken private by Canada Pension Plan Investment Board (CPPIB) and Baring Private Equity Asia on April 25, in a deal that values the company at US$4.3bn, including debt.

Global coordinators Deutsche Bank and HSBC, alongside bookrunners Credit Suisse and Macquarie, are leading the financing, which is being shown to a select group of institutional investors over the next couple of days, before launching for general syndication, the sources said.

The financing is expected to include around a US$1.3bn euro-denominated first-lien term loan and some US$500m euro- denominated unsecured bonds, the sources said.

There could also be a senior bond, and the financing could include preplaced first- and second-lien dollar-denominated loans.

The financing will fund the acquisition and refinance some US$800m of existing debt, the sources said.

CPPIB, Baring Private Equity Asia and Nord Anglia were not immediately available to comment.

WINDOW The financing equates to around 7.5 times Nord Anglia’s Ebitda, excluding US banks from committing to the deal that exceeds the 6.0 times debt-to-earnings ratio cap imposed on regulated banks that fall under the remit of the US leveraged lending guidelines.

It has however enabled European banks not regulated by the US to enjoy a window of opportunity of acting on highly leveraged deals before the leveraged lending guidelines, published by the ECB, come into effect in six months.

Until then, any deal committed to by a European bank can be upheld, which could prompt a flood of highly levered deals,the sources said.

European banks and sponsors are hoping an auction for German metering and energy management group Ista wraps up within the six month window as some bankers are working on debt financings in excess of 7.0 times Ebitda.

“Sponsors will be looking to sell and buy highly levered businesses before the ECB guidelines kick in. This is most definitely a window of opportunity,” a leveraged finance head said.

Editing by Christopher Mangham

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