The World’s Largest Direct Loan Just Landed at Over $2 Billion

U.K. insurance broker The Ardonagh Group has secured the largest-ever loan from a group of private credit funds led by Ares Management, according to a statement by the lender.

The group is refinancing its debt with a 1.575 billion pound ($1.97 billion) unitranche, a loan that bundles together senior and subordinated debt, as well as a 300 million pound capital expenditure facility. The club of direct lenders will provide both.

Banks are providing the business with a 171.5 million pound revolving credit facility that will have repayment rights ahead of the unitranche loan.

Ardonagh is also launching a $500 million PIK toggle note -- a type of debt that allows the company to defer interest payments at will. The fresh financing supports the firm’s acquisitions of Ireland’s Arachas and the U.K’s Bravo, two insurance brokers, as well as Bennett’s Motorcycling Services.

Including the new acquisitions, Ardonagh generated total pro forma ebitda of 275.5 million pounds for the 12 months to March 31. The cross-border deal has been in discussions since before credit markets shut in March.

“We believe this is the largest ever unitranche financing transaction globally,” said Blair Jacobson, Partner and Co-Head of European Credit at Ares Management. “There is a significant need in the current market to serve as a partner to companies in need of scaled financial solutions.”

As the size of their funds has grown to meet demand from yield-hungry investors, private credit funds have executed ever larger deals. But in Europe, they have mostly nibbled at the edges of the continent’s syndicated loan and high yield bond markets, picking up the occasional company in need of speed or secrecy. Direct lending clubs for jumbo deals are more common in the U.S.

The financing for Ardonagh is denominated in pounds sterling and was led by Ares Management’s European unit. All of the managers named as joining the deal are headquartered in North America, including Caisse de dépôt et placement du Québec, HPS, KKR, Oaktree Capital Management, and Owl Rock Capital. Other undisclosed investors also joined the financing.

The Ardonagh Group, initially formed out of U.K.-based Towergate, is majority owned by HPS Investment Partners and Madison Dearborn. HPS, which was initially a creditor to the firm, became a shareholder following a debt restructuring in 2015.

©2020 Bloomberg L.P.

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