The lending group is comprised of approximately 15 to 20 participants. Predominant shares of the loan are held by Oak Hill, Blue Owl, Ares Management Corp., HPS Investment Partners, and Oaktree Capital Management. Individuals with knowledge of the situation, who wished to remain anonymous have provided this insight and were quoted by Bloomberg. According to these sources, notable lenders also include Carlyle Group Inc. and KKR & Co.
The financing agreement encompasses two main components: a USD 4.8 billion unitranche, combining senior and subordinated debt, and a USD 500 million revolver. Additionally, Vista plans to contribute USD 1 billion in preferred equity, with payments facilitated through the issuance of additional debt. This arrangement enables Finastra to utilise this preferred equity to cover interest expenses.
This financial transaction, noteworthy for being the most substantial direct lending-based loan in the United States according to Bloomberg, highlights the escalating involvement of private credit firms in the realm of buyouts. The process of refinancing Finastra's debt encountered challenges initially, with Vista struggling to attract sufficient interest for a riskier portion of the loan. The situation took a positive turn as the private equity sponsor committed to providing preferred equity and restructured the loan setup.
Driven by robust demand, the unitranche component saw a reduction in pricing to 725 basis points above a key benchmark rate, with a discounted price of 98 cents per dollar. This is compared to previous discussions, where the loan was considered at 750 basis points above the benchmark rate, with a discounted price of 97.5 cents per dollar.
Due to oversubscription, lenders did not receive the full requested amount of orders they submitted. Some lenders experienced reductions of up to 50%, sources noted. Allocations for the funds were made on 15 August 2023, and the finalisation of the financing arrangement is anticipated within a few weeks. The proceeds from this funding will be allocated toward reducing Finastra's existing debt in both the US and European leveraged loan markets.
Headquartered in the UK, Finastra is a global financial software application and marketplace provider. The company serves institutions of various sizes. Finastra provides solutions across lending, payments, treasury, and capital markets, as well as retail and digital banking for banks to support direct banking relationships and grow through indirect channels, such as Embedded Finance and Banking-as-a-Service.
In July 2023, Finastra announced a partnership with MX Technologies, a US-based Open Finance company. The collaboration aimed to provide a simplified and personalised money experience by integrating MX’s Personal Financial Management (PFM), insights, and account aggregation solutions with Finastra’s Fusion Digital Banking solution to equip financial institutions with tools to better guide consumers towards financial wellness.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now