Golub Capital has taken the lead on a significant $1bn private debt facility to support private investment firm TA Associates’ acquisition of Momentive Software in a carveout from Community Brands, according to a report by Bloomberg.
The report cites unnamed sources familiar with the transactions as confirming that the deal includes a $700m term loan, equating to an approximately 70% loan-to-value (LTV) ratio, which is notably higher than the private credit market average of around 40%.
Even Golub Capital usually maintains a lower LTV, with one of its private credit funds reporting an average LTV of 41.4% as of 31 March, according to a Moody’s report on 14 June.
According to a press statement, the financing package also features a delayed draw term loan and a revolving credit facility.
Despite the higher risk profile of the transaction, the loan was priced at 5.25 percentage points above the Secured Overnight Financing Rate and included an original issue discount of 98 cents on the dollar.
Momentive Software, formed from Community Brands’ association, events and nonprofit solutions divisions, will now operate independently, offering cloud-based software, services and payment solutions for the first time.
Golub Capital served as the administrative agent and sole lead arranger for this deal and planned to syndicate the loan post-closing. This strategy, often employed by private credit managers, aims to mitigate risk and reduce exposure to single names. However, the syndication process faced challenges as potential buyers considered the investment too cheaply priced relative to the perceived risks, particularly given Momentive Software’s expected slower growth, compared to other tech companies, and the higher LTV.
Nevertheless, according to the press release, Golub’s capital markets team successfully led an “oversubscribed syndication involving a group of 15 diverse lenders.” Golub Capital has been a lender to Community Brands since 2018 and maintains a longstanding relationship with TA Associates.
