CapVest Partners has lined up around €1.4bn of payment-in-kind (PIK) debt from private credit lenders, including Goldman Sachs Asset Management and KKR, to back its acquisition of a majority stake in Stada Arzneimittel AG, according to a report by Bloomberg.
The deal for the German pharmaceuticals group marks one of Europe’s largest leveraged buyouts this year, with Bain Capital and Cinven set to retain minority stakes in the business. While terms of the transaction have not disclosed, reports suggest the company was valued at around €10bn including debt.
PIK financing – which allows borrowers to defer interest payments until maturity – is typically among the most expensive forms of leverage, but has gained traction amid strong investor appetite for yield and a muted syndicated loan market.
A large portion of Stada’s existing borrowings will remain in place under a portability clause, enabling CapVest to assume the debt package without arranging new financing – a feature increasingly used in European private equity transactions to streamline buyouts, though at the expense of banks that typically earn fees from new issuance.
Stada is expected to refinance a smaller tranche of non-portable debt with up to €400m of senior facilities, according to people familiar with the matter.
