Whole-business or operating-company securitization may be the latest fad in structured finance, but there is nothing new about the concept. Since the mid-1990s, specialist buy-out firms such as Nomura’s Principal Finance Group have financed their purchases of pub estates and train rolling-stock companies by pledging all the cashflows from these businesses to bondholders.
What is new about the latest such deal is the type of business being securitized. At the end of February, JP Morgan closed a deal that partly refinanced Doughty Hanson’s acquisition of food company Ranks Hovis McDougall (RHM).
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