Symphony Technology Group looks like it’s getting some money back on its investment in First Advantage.
Atlanta-based First Advantage, which provides employment background screening, is in the market with a $655 million loan, according to Thomson Reuters Loan Pricing Corp. The $655 million loan will be used to fund a dividend recap, LPC said.
It’s unclear how much of the dividend will go to Symphony Technology, which bought First Advantage in December 2010. The sale was valued at $265 million, according to a statement from that time.
First Advantage, in 2013, acquired the employment and resident screening business of LexisNexis Risk Solutions, a division of Reed Elsevier. Financial terms weren’t announced.
Palo Alto, Calif.-based Symphony Technology mostly invests in technology and software companies. In 2012, Symphony closed its fourth fund at $870 million. Symphony Fund III collected $791 million in 2007, Buyouts said.
Performance data for Fund IV was unavailable. STG III LP is producing a 5.7 percent net IRR and 1.2x investment multiple as of March 31, according to performance data from CalPERS.
First Advantage’s capital structure has been highly leveraged since Symphony bought First Advantage in 2010, Standard & Poor’s said in an October report. Most financial sponsors focus on producing investment returns over short time periods, often with acquisitions or dividends, S&P said.
First Advantage had $485 million in debt as of June 30, S&P said.
“Although Symphony Technology Group has shown willingness to contribute additional equity for acquisitions, we believe the company could increase leverage over 5x in the future, to make additional acquisitions or pay a debt-financed dividend,” S&P said.
Calls and messages to First Advantage and Symphony Technology were not returned.
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