Bankers are lining up two separate debt financing packages worth a combined total of 3.2 billion euros ($4.36 billion) to back the acquisitions of healthcare firms Quiron and Generale de Sante, banking sources said on Wednesday.
CVC Capital Partners is buying a 61 percent stake in Spanish hospital group Quiron from fellow private equity firm Doughty Hanson and will merge the company with its other Spanish medical group IDCsalud, which it has owned since 2011.
Meanwhile Australia’s Ramsay Health Care and Credit Agricole Assurances (CAA) are buying a majority stake in French private healthcare group Generale de Sante.
BNP Paribas, JP Morgan and UniCredit are providing a 2.15 billion euro leveraged loan financing to back the Quiron merger which is due to launch for syndication to investors next week. The deal will be split between first and second lien loans and will have leverage of around 5.5 times, the banking sources said.
CVC declined to comment.
Private healthcare groups are taking hold in Spain following cuts to health and education spending by the government as it tries to hit tough budget targets.
Elsewhere a bank meeting is due to take place on Thursday to show investors a 1.075 billion euro financing backing the takeover of Generale de Sante.
Ramsay and CAA agreed to acquire an initial 83.43 percent of Generale de Sante for around 750 million euros from DeA Capital’s Sante and Sante Development Europe units. Ramsay said that its 57 percent share of the acquisition, or 429 million euros, potentially rising to 515 million euros for a full takeover, was fully debt funded. Barclays, BNP Paribas, Credit Agricole, Deutsche Bank and Natixis are leading the debt financing, which includes a 500 million euro term loan for institutional investors.
Both deals are covenant-loose and include just two financial protections — leveraged and interest cover covenants — as opposed to a usual four covenants which also include fixed charge and free cashflow covenants. Covenant-loose however offers more protections than a covenant-lite deal, which sees the removal of maintenance covenants.
($1 = 0.7331 Euros)
(Reporting by Claire Ruckin. Editing by Christopher Mangham)