The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.

Asset-backed financing proves popular for private equity firms, says Demica

Private Equity (PE) houses are increasingly turning to asset-backed finance as a way of reducing the burden of expensive senior debt and improving liquidity in the wake of Leveraged Buyouts (LBO), according to research from Demica.

 

Over 60% of top PE organisations stated that securitisation is becoming a more important source of replacement capital to ease debt repayment schedules and respondents estimated that a significant proportion (12%) of deals already employ trade receivables securitisation.

Given the current surge in LBO activity, the cost of debt burden is a growing issue for LBO firms. The majority (57%) of respondents felt that leveraged finance would become more expensive over the next two years; and two thirds pointed to a consequent focus on the terms of 'carve out' provisions in buy-out financing agreements, building in the flexibility to accommodate future alternative financing structures.

Interestingly, 62% of survey respondents stated that the role of securitisation in providing alternative sources of liquidity and its impact on amortisation/repayment schedules was becoming increasingly important.

Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to Euromoney.com and Asiamoney.com analysis and receive expertly-curated updates direct to your inbox.

 

Already a user?

Login now

 

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree