Blackstone Inc.’s credit unit is lending funds to support Permira Holdings’ takeover of biopharmaceutical services firm Ergomed Plc, the latest sign that private lending firms are taking buyout business from banks.
Investment firm Permira agreed to buy UK-listed Ergomed for 1,350 pence per share in cash, according to a statement on Monday. Blackstone is supporting the acquisition with a £200 million ($253 million) unitranche loan and an £85 million delayed draw term loan, public filings showed.
Blackstone and Permira declined to comment, while Ergomed did not immediately respond to requests for comment from Bloomberg News. Ergomed shares were up 27% after news of the takeover deal.
The $1.5 trillion world of private credit is becoming an increasingly useful funding tool for private equity firms looking to take public companies private — a change from five years ago, when these transactions were nearly always the business of banks.
Banks are now getting more selective about which deals to finance, on concerns they won’t be able to sell on the debt to investors after the transaction closes. That’s been exacerbated by deal processes taking upwards of six months, at a time of market volatility and continued interest-rate hikes.
Meanwhile, private debt managers such as Ares Management and Blackstone are able to write larger cheques as their funds get bigger. They can also tout their speed and discretion to private equity firms.
In June, private debt funds at Blackstone and Goldman Sachs Asset Management led a £1.25 billion deal to support EQT AB’s acquisition of Dechra Pharmaceuticals Plc, beating banks to a deal that was the biggest European take-private of the year.