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AXA Private Equity predicts increased role for unitranche financing to support companies’ growth in 2012

AXA Private Equity, is predicting an increase in the role of unitranche financing for companies seeking to finance growth as the European economic turbulence continues. By blending the entire debt financing piece into one single tranche – combining the senior and subordinated debt – companies have greater access to the necessary resources to finance their investment projects, providing them with a viable alternative to traditional bank financing.

AXA Private Equity’s mezzanine team is a market leader in Europe in unitranche financing having invested around EUR400m in Unither Pharmaceuticals, FDS Group, and Biomnis in 2011. This equates to more than 70% of the total amount invested through unitranche financing in France last year.

Cécile Mayer-Lévi (pictured), Managing Director at AXA Private Equity mezzanine, says: "In this tough environment, unitranche financing has become an important way to finance future investments and enhance value creation. With scarce credit and banks increasing reluctance to lend, we expect the prominence of unitranche financing to increase significantly this year.”

The unitranche financing structure has many benefits, particularly as it releases the company from the burden of the amortization of senior debt. In addition, the equity investor can optimise its investment and find a quick way to get funding, by talking to one source, and not a banking pool.

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