Taking the Credit — P2Ps continue to please
- Josie Shillito
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A new public-to-private this week (HIG Capital’s £315m take private of UK-listed courier and logistics company DX Group, announced 17 November 2023) serves up a firm reminder that public markets continue to offer value to sponsors in an otherwise opaque and lumpy M&A environment.
However, the debt financing backing the acquisition does not. DX Group’s financing, provided by international bank Nomura and US asset manager PGIM, leveraged at only 3.5x but priced at a rewarding (to the lenders) 700bps on the senior debt, will cost DX Group as much as 12.25% all-in when base rates are taken into consideration. Yet it is not as if sponsor HIG Capital has much choice.
“You’ve got to remember that in the UK there’s the ‘rule of six’ in the takeover code,” said a market source familiar with P2Ps, referring to the UK Takeover Panel’s rule that no more than six parties are to be informed of a planned acquisition ahead of the Rule 2.7 announcement.