Lenders are beginning marketing efforts for a €1.5bn ($1.75bn) financing package supporting Lone Star Funds’ acquisition of Lonza Group AG’s capsules and health ingredients business, according to a report by Bloomberg.
The report cites unnamed people familiar with the matter as revealing that the arrangement is being led by Goldman Sachs Group Inc and Jefferies Financial Group Inc, which are currently conducting early-stage discussions with a select group of investors before a wider syndication launch expected later this quarter.
The financing is set to comprise roughly €1bn in leveraged loans alongside about €500m in high-yield bonds, structured to appeal to distinct investor pools across Europe’s leveraged finance market.
The deal comes as the European syndicated loan and bond markets show tentative signs of reopening after recent volatility linked to geopolitical tensions, which had temporarily slowed deal activity.
Investor interest is expected to be supported by the nature of the underlying asset. The business being acquired – part of Lonza Group’s pharmaceutical and biotech-focused capsules and health ingredients division – is viewed as a more defensive industrial asset compared with higher-risk software borrowers that have faced increased scrutiny in the leveraged credit market.
Lone Star agreed last month to acquire the unit in a transaction valued at approximately CHF2.3bn ($2.9bn). Under the structure, Lonza will receive CHF1.7bn in cash upfront while retaining a 40% stake in the business.
A syndicate of around 11 banks is involved in the financing, including UBS Group, BBVA, BNP Paribas, ING, Société Générale, Standard Chartered, UniCredit, Intesa Sanpaolo and Raiffeisen Bank International, among others. The expanding size of lending groups reflects both heightened competition to underwrite leveraged buyouts and private equity sponsors’ preference for broader risk distribution across banks.
Basel-based Lonza Group AG is a major contract manufacturer for the pharmaceutical and biotech sector and is the world’s largest producer of monoclonal antibodies, a key technology used in treatments such as Alzheimer’s therapies.
