Banks are preparing to move a large financing tied to a household energy supplier just as the market gears up for a heavy slate of buyout debt. The plan is to sell £3.6 billion of debt that backs the take-private of DCC Energy, with outreach aimed at buyers of high yield bonds and infrastructure loans. The financing is expected to be sold down next year, according to people with knowledge who did not want their names used because the matter is private.
An August filing shows the underwriting group includes Goldman Sachs Group Inc., Morgan Stanley and 10 additional banks. The buyout values DCC Energy at £5.7 billion and is being led by KKR & Co. and Energy Capital Partners. Spokespeople for Morgan Stanley and for DCC Energy said they had no comment. Spokespeople for KKR, Energy Capital Partners and Goldman Sachs did not immediately respond to requests for comment.
The take-private will be reviewed by Britain's antitrust watchdog, a process that typically keeps the financing sitting on bank balance sheets for longer. All of this is landing as lenders prepare to place more than $138 billion of leveraged buyout debt into the market in the months ahead and continuing through next year. Liquidity is expected to be sufficient overall, though the volume is likely to make investors pickier on price and structure.
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Dublin-headquartered DCC supplies fuel and gas throughout Europe and in the US. A sale would remove one of the few Irish-headquartered companies left in the FTSE 100, following actions by companies such as CRH Plc and Flutter Entertainment Plc to pursue listings in the US. For everyday investors, the takeaway is simple enough. A chunky block of new buyout paper is coming, and when supply is this full, pricing and terms tend to matter more.
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