LONDON, Dec 7 (Reuters) - Nine banks have lined up €725m of leveraged loans to back Nordic Capital’s acquisition of Germany’s second-largest nursing home operator Alloheim, banking sources said.
Nordic Capital agreed to buy Alloheim from Carlyle for about €1.1bn, it emerged on December 5, beating DomusVi, backed by Intermediate Capital Group, as well as buyout groups Ares and Fosun in an auction process.
The financing comprises a €500m term loan B, a €125m second-lien loan and a €100m revolving credit facility, the banking sources said.
It is highly levered at 7.2 times Alloheim’s approximate €88m Ebitda, the sources said.
Barclays, Credit Agricole, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Mizuho, SEB and SMBC have underwritten the financing that is set to launch for syndication to investors in the new year, the sources said.
Nordic Capital was not immediately available to comment.
While underwrites are a lucrative business for banks and are crucial for returns in light of a flood of less profitable refinancings and repricings this year, the unusually large line up of lenders on Alloheim is expected to compress the fees made by each lender, the sources said.
“For a deal of this size there should be three to four banks max,” a syndicate head said.
However, sponsor Nordic Capital likes to work with a large group of lenders and the RCF is large enough to demand a longer line up of banks as it is in excess of a turn of leverage, the sources said.
The broader healthcare sector has seen some high-profile deals this year in Germany, including the sale of generics group Stada to private equity firms Bain and Cinven.
Separately, German drugs and high-tech chemicals company Merck is trying to sell its consumer health division valued at up to €4bn.
Since Carlyle bought Alloheim from Star Capital in 2013, the buyout group has added to the business with a series of acquisitions.
Alloheim operates 155 nursing homes with 20,000 residents. It employs 14,500 staff. (Editing by Christopher Mangham)