(Bloomberg) -- Blackstone Inc. and Goldman Sachs Asset Management are leading a £1.25 billion ($1.6 billion) direct lending deal to support EQT AB’s recent purchase of Dechra Pharmaceuticals, as private credit lenders further encroach on traditional debt markets.
Blackstone and Goldman are committing £400 million pounds each to the deal, according to people familiar with the matter who were not authorized to speak publicly. CVC Capital Partners, KKR & Co., Park Square, PSP Investments, Permira and GIC are also committing smaller amounts, the people added.
“Financing a large, global and high-quality business like Dechra continues to reinforce the role private credit plays in European capital markets,” Michael Ryan, head of UK origination for Blackstone’s credit business said in a statement provided to Bloomberg in which he confirmed the firm’s involvement in the deal.
Blackstone declined to comment on the details of the transaction. Spokespeople for Goldman Sachs, GIC, Permira, Park Square, CVC, KKR and EQT also declined to comment, while PSP didn’t respond to a request for comment.
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The $1.5 trillion private credit market is grabbing more market share from traditional debt providers such as investment banks, as fears around inflation and an economic slowdown keep the publicly-traded debt markets volatile. The relative speed and certainty of execution offered by direct lending is attracting more and more borrowers, resulting in what some are describing as a “golden era” for private credit.
Billion-dollar plus transactions for firms such as CordenPharma, The Access Group and Envirotainer all landed in the pockets of direct lenders.
Private debt titans such as Blackstone and Goldman Sachs’s asset management unit have the liquidity needed to compete with investment banks to fund public-to-private deals such as Dechra’s. Similar transactions for firms such as Euromoney Institutional Investor Plc and CareTech Holdings Plc were financed through direct lending last year.
Read more: EQT to Buy Vet Firm Dechra for $5.6 Billion After Price Cut
Under the terms of the recommended £4.46 billion take-private deal, EQT will pay Dechra investors 3,875 pence a share, according to a statement on Friday that confirmed a Bloomberg News report. The Swedish buyout firm also spoke to investment banks to look to finance the take-private, but ultimately chose a set of direct lending funds.
--With assistance from Claire Ruckin.
(Updates with comment from Blackstone in third paragraph.)
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