A group of direct lenders led by Blackstone Inc. is providing about $5 billion of debt to help fund the leveraged buyout of software maker Zendesk Inc., according to people with knowledge of the matter.
The financing for the acquisition of the company led by Hellman & Friedman and Permira includes a $3.75 billion term loan and a $350 million revolving credit facility, according to a filing Friday. It also includes a loan of $750 million to $1 billion that can be drawn at a later date, according to the people, who asked not to be identified discussing a private transaction.
The lender group also includes Apollo Global Management Inc., Blue Owl Capital and HPS Investment Partners, the people said. Blue Owl is acting as administrative agent on the loan, one of the people said.
Representatives for Blackstone, Hellman & Friedman, Permira, Apollo, Blue Owl and HPS declined to comment. A spokesperson for Zendesk didn’t immediately respond to a request for comment.
The financing for the acquisition also includes $6.32 billion of common equity, as well as $500 million of preferred equity, according to the filing.
Direct lenders, flush with cash after a record year for fundraising and somewhat insulated from the selloff in financial markets, have swept in to provide loans for buyouts as credit markets seize up.
Some sponsors are even bypassing the public markets altogether as banks struggle to offload debt they’ve committed to provide for acquisitions, selling loans and junk bonds at steep discounts and risking billions of dollars of losses on an $80 billion backlog of debt sitting on their balance sheets.
A few buyout firms have turned to cash-rich private lenders to place the riskiest piece of their buyout financings.
A group of lenders led by Ares Management Corp. bought the unsecured portion of the $11.15 billion debt financing supporting Elliott Investment Management and Brookfield Asset Management’s acquisition of U.S. TV ratings business Nielsen Holdings Plc.
Goldman Sachs Group Inc.’s asset management division stepped in with a $865 million second-lien loan to help fund Brookfield Asset Management’s acquisition of auto-dealership software company CDK Global Inc.
Direct lenders also provided $2.5 billion to fund private equity firm Thoma Bravo’s $10.7 billion purchase of software company Anaplan Inc. earlier this year.
San-Francisco based Zendesk is being acquired for about $9.5 billion. Including debt, the deal is valued at about $10.2 billion, and shareholders will receive $77.50 per share.
The deal followed an announcement by Zendesk earlier this month that it would remain independent after failing to find a potential buyer. Zendesk said in a statement at the time that, even though it had extended the process to allow would-be buyers to secure financing, “no actionable proposals were submitted.”
