Private credit lenders are currently in advanced negotiations to finalize a €6.25 billion ($6.8 billion) loan agreement with Adevinta ASA, an online classifieds company. This deal, if successful, would be one of the largest of its kind. The move would be a setback for banks that had proposed to refinance the company's debt. Private credit funds have an advantage in maneuvering loans during uncertain times despite bank debt being typically cheaper.
The ongoing talks with Adevinta reflect the impact of diminishing investor confidence on markets due in part to uncertainty surrounding US President Donald Trump's trade tariffs. Recent days have seen the withdrawal of junk loan deals by companies in both Europe and the US.
The negotiations with Adevinta involve reducing the cost of its current debt and securing additional credit to facilitate a dividend payout for its private equity stakeholders, Blackstone Inc. and Permira. The largest-ever direct loan for Adevinta was the €4.5 billion unitranche financing in 2023. Private credit lenders are now aiming to lower the interest rate by one percentage point on the unitranche loan, setting a new rate of 4.75% over the Euro Interbank Offered Rate. They are also considering extending an extra €1.75 billion, a portion of which will be allocated for dividend recapitalization.
The funding details are subject to change as discussions are ongoing. Adevinta, Blackstone, and Permira representatives have chosen not to provide comments at this time.
Adevinta currently generates over €1 billion in EBITDA. Initially considering multiple refinancing options, including bank loans or private credit, the company now seems to be favoring the private credit channel. Should the deal be sealed, it would be a testament to the thriving private credit sector, valued at $1.6 trillion, becoming a primary funding source for private equity firms.
On the other hand, banks were anticipating new financing prospects amidst sluggish merger and acquisition activity. While the broadly-syndicated leveraged loan market observed significant deal flows in the latter half of 2024 as investors flocked to credit funds, the recent cancellations mark the first signs of instability this year.