Investment banks beat out private credit in CVC’s latest buyout deals
CVC Capital Partners has opted to finance two of its latest buyouts with loans from investment banks, said people with knowledge of the matter, beating out direct lenders in the process.
The private equity firm financed its acquisition of Italian restaurant chain Gruppo La Piadineria with a 200 million euro (S$291.8 million) loan from lenders including UniCredit, Credit Agricole and Natixis, said the people, who were not authorised to speak publicly.
Those lenders are expected to sell on some of the debt to a wider group of banks.
CVC also funded its acquisition of German vitamin and supplement maker Sunday Natural with about 200 million euros of financing from banks including Deutsche Bank, UniCredit and UBS Group.
The CVC deals are the latest indication of a comeback for traditional lenders, which are benefiting from calmer leveraged loan markets and the prospect of interest rate cuts.
The revival means more competition for the US$1.6 trillion private credit market, which boomed over the past 18 months as soaring rates and hung debt made banks cautious about underwriting fresh leveraged buyouts.
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Spokespeople for CVC, Credit Agricole and Unicredit declined to comment. Natixis, Deutsche Bank and UBS did not respond to requests for comment.
Bank financing may provide private equity sponsors a cheaper cost of capital than direct lenders can offer – and is often from local banks that like and support the business.
Pricing for the loan backing the La Piadineria deal was in the range of high-400 basis points over the Euribor benchmark, one of the people said. Unitranche pricing from direct lenders tends to be over 600 basis points.
There are also geographical nuances, with direct lenders typically more cautious about deals in Italy, because of greater legal protections given to borrowers than elsewhere.
For the banks, underwriting buyout debt is a lucrative and much sought-after business, as it provides some of the most generous fees on offer in investment banking.
At the same time, private lenders are often not particularly enthusiastic about consumer-facing businesses, as they are seen as more cyclical.
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