Blowout response
Private equity giant Blackstone Group’s US$957m loan backing its leveraged buyout of Singapore-headquartered Interplex Holdings closed to a blowout response in April as the largest financial sponsor-driven financing in South-East Asia for four years.
With nearly two dozen lenders joining in general syndication, it was one of the most widely syndicated loans from Asia in the year. Among those joining were 10 banks from Taiwan, half a dozen from China and some that were first-time lenders to LBOs.
One of the participants was Clifford Capital, a non-traditional LBO lender which usually provides project and structured debt financing to Singapore-based companies in the infrastructure and maritime sectors.
The overwhelming reception from lenders was impressive considering the large size of the borrowing and the timing of the launch in early February, shortly before Russia’s invasion of Ukraine on February 24.
While high-precision components manufacturer Interplex is no newcomer to the leveraged finance market, the latest loan was its largest as well as the biggest LBO loan from South-East Asia since a financing for Global Logistic Properties in late 2017/early 2018. A previous US$400m five-year LBO refinancing for Interplex, with Baring Private Equity Asia as sponsor, closed in March 2019 after drawing 16 lenders in general syndication in addition to featuring eight mandated lead arrangers and bookrunners.
Until the 2022 borrowing, Interplex’s largest loan was a US$455.75m financing completed in April 2016 with an interest margin of 425bp over Libor tied to a gross leverage grid. The 2019 loan paid a top-level all-in pricing of 385.5bp based on an opening margin of 350bp also tied to a leverage grid.
In comparison, the latest US$957m loan offered much juicier returns of a top-level all-in pricing of 412.53bp based on an opening margin of 375bp over SOFR and an opening leverage of around 5x (after excluding a US$117m revolving credit portion and cash on the balance sheet).
The higher leverage multiple and the larger size of the 2022 borrowing reflected Interplex’s improved performance – its Ebitda had doubled by September 2021 from 2016.
The latest five-year loan only had three original MLABs and underwriters – ANZ, Barclays and DBS Bank – with the trio pre-funding the borrowing in January 2022. Credit Suisse and China Citic Bank joined as equal-status arrangers prior to the launch in general syndication.
Blackstone’s strong profile as a sponsor added to the appeal as did the security package, comprising first-ranking share pledges over shares of the company, offshore material subsidiaries incorporated outside China and onshore units. The borrowing also carried guarantees from Interplex and all offshore subsidiaries incorporated outside China.
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