Warburg Turns to Private Debt for $2.3bn Informa Unit Deal

Warburg Pincus LLC has tapped the private credit market to fund its $2.3bn takeover of Informa’s Pharma Intelligence division.

It’s the latest example of private equity firms using direct lending to raise M&A financing, instead of public debt markets.

Blackstone Inc.’s private credit arm led the financing with Goldman Sachs Asset Management and Golub Capital as well, according to people familiar with the matter. The financing came in the form of a unitranche — a blend of senior and junior debt into a single facility — worth 665 million pounds, they said. The rest of the deal will be funded with equity.

The private debt market is booming as investors look for ways to diversify and capture higher yields. For a number of borrowers, the market has become a first port of call and is increasingly used to fund major buyouts, particularly ones involving high equity checks.

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The Informa deal is covenant-lite, meaning it has fewer restrictions for the borrower and fewer protections for the investor. It’s a feature that’s common in the syndicated market, but now being adopted by private credit in the race to fund buyouts.

Spokespeople for Blackstone Credit, Goldman Sachs Asset Management and Warburg Pincus declined to comment. Golub didn’t immediately respond to a request for comment.

The pharma analytics unit will be leveraged by up to 8.9 times in the takeover, said the people. At this multiple, it’s unlikely to find funding in the bank market.

Though a rarity, private credit funds are prepared to lend up to double-digit debt multiples, if the business is in a resilient industry like software or healthcare.

Source: Bloomberg Quint

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