high yield

Recaps Attract PE Investors to Improve Fund Performance

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February 6, 2014

Eased debt markets are being tapped by private-equity firms to pay themselves dividends from the companies they own, says Private Equity Beat. “Last year, so-called dividend recapitalization deals, in which companies take on additional debt to fund payouts to their private-equity owners, drove a record USD 66.2 billion of bond and issuance, breaking the previous record of USD 64.2 billion in 2012, according to the blog, citing data from S&P Capital IQ LCD.

 

The strategy is sometimes used by private-equity funds to make gains on portfolio holding if they do not find buyers or take companies public. According to the latest S&P report, Forest Laboratories was the biggest high yield bond issuer last week in terms of volume with a USD 1.05 billion offering backing the pharmaceutical concern’s acquisition of Aptalis from TPG Capital. It was one of new issues last week that involved a private equity concern.

 

One of the PE sponsored deals done last week was a USD 300 million offering backing ARC Financial’s Seven Generations Energy. (Image source: S&P HighYieldBond.com)

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