The private credit firms have benefited from unique conditions they attached to the preferred equity’s structure that has helped the investment pay off. Vista, Elliott, Citrix didn’t respond to requests for comments. Bank of America and Goldman Sachs declined to comment. Representatives for Oak Hill, KKR, HPS, Ares, Carlyle and Blue Owl declined to comment. Such “hung debt” situations continue to plague some banks, though they have made significant progress in reducing their exposure.īanks’ final losses on the Citrix debt are an estimate and also depend on how much flexibility they received in the original underwriting. and Bank of America Corp., were caught off guard by spiking interest rates that drastically shifted the expected yields on debt issuance and were forced to offload at a steep loss. The banks, which included Goldman Sachs Group Inc. It was a different situation early last year, when banks struggled to unload $15 billion of debt they underwrote for Elliott Investment Management and Vista Equity Partners’ purchase of Citrix. and HPS Investment Partners.Ĭitrix locked in the new financing after debt markets rallied on evidence of cooling inflation that may allow the Federal Reserve to end its cycle of interest-rate increases. Investors in the preferreds also include Apollo Global Management Inc., Ares Management Corp., Blue Owl Capital Inc. The preferred was paid at around 107.5 cents to the dollar, the people said, well above the initial sale price of 97 cents. The loan proceeds along with cash from Citrix’s earlier sale of the startup Wrike has now paid down about half the original preferred equity sum of $2.5 billion, according to people familiar with the matter who aren’t authorized to speak publicly.Ĭombined with the interest earned since the deal closed, the private credit firms are realizing a more than 30% internal rate of return on their investment, according to the people. provided last year, taking advantage of an improving outlook for the cloud-computing company and a rally in its debt. are raking in gains on their investment, in sharp contrast to Wall Street banks that have realized some $1.3 billion of losses.Ĭitrix tapped the leveraged loan market last week for $1 billion to pay down some of the preferred equity that investors including Oak Hill Advisors, Carlyle Group, and KKR & Co. (Bloomberg) - Private credit firms that provided a risky type of financing for the leveraged buyout of Citrix Systems Inc.
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