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Private Equity Firms Are Cutting Out Banks and Funding LBOs Themselves

  • Leveraged buyouts increasingly funded by PE firms themselves
  • Direct lenders could soon take 10% of leveraged loan sales
The Blackstone Group Inc. headquarters in New York.
Photographer: Mark Abramson/Bloomberg
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More and more, private equity firms looking to finance big leveraged buyouts are cutting out the Wall Street banks, and borrowing money from each other or from direct lenders.

Private equity firm Thoma Bravo bypassed banks when getting $2.6 billion of debt financing for its buyout of in July, and for a $2.3 billion loan for the buyout of Calypso Technology Inc. in April. In early 2019, these loans rarely exceeded $500 million. But the funds that provide them are swelling, and the financing offered increasingly tops $2 billion.