Vista Equity Partners tapped a credit line backed by its private equity stakes to finance a cash injection for Finastra Group Holdings Ltd. that allowed the software company to pull off a key $5.3 billion debt refinancing, according to people with knowledge of the matter.
(Bloomberg) — Vista Equity Partners tapped a credit line backed by its private equity stakes to finance a cash injection for Finastra Group Holdings Ltd. that allowed the software company to pull off a key $5.3 billion debt refinancing, according to people with knowledge of the matter.
The private equity firm relied on a net asset value loan — a type of financing that buyout shops can obtain against the value of their funds — to come up with $1 billion of preferred equity to inject into Finastra, said the people, who asked not to be identified discussing confidential deal information.
The cash helped Vista break an impasse with private credit firms over a multibillion-dollar debt refinancing for Finastra. A group of direct lenders led by Oak Hill Advisors ultimately provided $5.3 billion to Finastra in what ranks as the largest private credit package ever arranged.Â
A spokesperson for Vista declined to comment.Â
Read more: Private Equity Deal Rut Spurs Firms to Raise Cash Creatively
Vista tapped the NAV line using one of the funds through which it holds its stake in Finastra, the people said, in essence reducing the portfolio company’s debt load by borrowing at the fund level.
NAV loans have been growing in popularity as a way for private equity firms to shore up portfolio firms, return capital to investors or finance new investments. Companies in which the private equity funds own stakes are used as collateral for the loan. Lenders typically charge interest of between 550 and 700 basis points over base rates for NAV facilities with loan-to-value ratios of as much as 30%.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.