Alter Domus Bidders Drop Direct Lending Solution in Favor of TLB + HoldCo PIK as Founder Puts Cap on Cash-Pay Leverage

Private equity firms bidding for Luxembourg-based fund administrator Alter Domus have opted to bid with financing packages comprising syndicated bank debt and HoldcoPIK instead of pure direct lending solutions, sources told Reorg.

Cinven, H&F and TPG are in the second round of the auction, as reported, and had initially been looking at both unitranche and underwritten solutions, the sources said.

However, the company’s founder Dominique Robyns wants to remain invested in the business and has put a cap on cash-pay leverage at 5.75x based on €214 million EBITDA, sources said. This is the same level as the staple offered by sell-side advisor and incumbent lender Goldman Sachs, as reported.

Direct lenders were able to offer an additional €300 million in cash-pay debt quantum, and were pushing pricing towards 500 bps over the base rate, the sources said. However, with comparable transactions TMF Group and IQ-EQ recently pricing euro-denominated TLB debt at Euribor +375 bps and E+400 bps, respectively, bidders for Alter Domus have opted to pursue the same route, they added

Final bids are due on Friday, Feb. 16, according to the sources.

Alter Domus raised a dual-tranche €600 million equivalent term-loan in 2021, as reported. The €400 million tranche paying E+350 bps, is bid at 99.63, according to Solve Advisors, while the $245 million portion paying Libor+375 bps is bid at 99.88.

Permira owns a minority stake of around 37% in Alter Domus, as reported, but will sell alongside the founder Dominique Robyns who led the buyout from PwC in 2003 and other private shareholders, giving a controlling stake to the new owner.

The targeted valuation for the asset is €4.5 billion, as reported. Other transactions in the space have demanded multiples north of 20x EBITDA, according to Fundamentals by Reorg.

Goldman and Raymond James have a joint mandate to sell the business, as reported.

Alter Domus is a Luxembourg-headquartered provider of fund administration, debt capital markets and corporate services.

Permira declined to comment.

Disclosure: Reorg and Alter Domus are both Permira portfolio companies.