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Roark to seek record $5bn whole-business securitisation financing for Subway deal

Roark Group, the private equity firm that has agreed a $9.6bn deal to acquire sandwich chain Subway, is planning to borrow nearly $5bn to fund its investment in what would be the largest whole-business securitisation deal ever, according to a report by Bloomberg.

The report cites unnamed sources as revealing that Roark intends to convert the $4.9bn in temporary funding provided by a group of seven banks – Morgan Stanley, Barclays, JPMorgan Chase & Co, Mizuho Financial Group, MUFG, Rabobank and Wells Fargo & Co – into a whole-business securitisation.

Whole-business securitisations, whereby businesses mortgage all of their cash-generating assets, including royalties, franchise fees and intellectual property, to obtain capital, are becoming increasingly popular among fast-service restaurant franchises, as they help companies with strong revenue streams but lower levels of hard assets borrow more cheaply than in loan and bond markets.

The report cites Barclays as confirming that the largest single whole-business securitisation to date was a roughly $2.6bn issuance from Dunkin’ Brands in 2015, while Arby’s Restaurant Group, Wendy’s Co, and Domino’s, which holds the most outstanding debt from whole-business securitisations, at around $5bn across multiple deals, have all tapped the market in recent years.

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