Deals
Australia Becomes New Testing Ground for Riskier New Funding Tool
- Appetite growing from institutions for loans in Australia
- Private equity looking more at using unitranches in Australia
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Private equity firms doing buyouts in Australia are turning to a kind of financing used in the U.S. and Europe that gives them more flexible terms, even as it may introduce new risks for creditors.
There have been at least four deals Down Under this year where private equity firms including KKR & Co. have used so-called unitranche loans, which fuse senior and subordinated parts of traditional leveraged transactions, to finance acquisitions. Non-bank lenders typically put up the funds for unitranche debt and because there is no need to negotiate separate senior and junior facilities, deals can be done faster. There had been few such funding deals announced in Australia before 2017.