Belgian Drugmaker in Talks on $800 Million Debt Deal

Pharmaceuticals firm SERB plans to line up $800 million to finance an acquisition in the U.S. and may turn to direct lenders to fund part of the deal, according to three people with knowledge of the matter.

The Brussels-based drug-maker, bought by private equity group Charterhouse Capital Partners in 2017, is weighing up either a leveraged debt deal arranged by banks or financing provided by direct lending firms, said two of the people, who asked not to be identified by name because the information is private.

If it opts for the direct lender route, SERB would put together a club of two or three lenders to provide a unitranche, the people said. These directly-arranged deals blend senior and more subordinated debt into a single loan.

A spokeswoman for Charterhouse declined to comment on the financing. SERB did not respond to emailed messages for comment.

Growing Challenge

Private credit managers -- backed by long-term capital from deep-pocketed institutional investors -- are competing more aggressively with investment banks on M&A financing deals.

The direct lending market has come from nowhere two decades ago to mushroom in size to about $850 billion in assets, according to data provider Preqin. The bigger providers of private credit now have the scale to fund deals up to $1 billion.

Earlier this month, HPS Investment Partners backed two buyouts in the healthcare sector with loans totaling roughly $1 billion. Meanwhile, the Ares Management-led 1.88 billion-pound ($2.43 billion) credit to help U.K. insurance broker Ardonagh Group refinance its debt earlier this year broke records in the sector.

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