Private equity firm Warburg Pincus has secured a $1bn net asset value (NAV) loan from private investment major Apollo Global Management Inc, to pay down bank facilities involving an older fund, according to a report by Bloomberg.
The report cites people familiar with the matter as confirming that the loan was secured by a portion of investments in a $15bn fund launched by Warburg in 2018 and represents the first time that the PE firm has turned to an investment institution rather than a bank to borrow against a portfolio of companies.
According to Bloomberg’s sources, the decision was made in part because Warburg wanted to expend its funding sources beyond traditional Wall Street banks.
At a rate of 10%, Warburg is reportedly paying marginally more for the loan than the debt it is replacing, but decided reducing its reliance on banks was worth the extra cost.
