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Private credit and bank loan convergence joined at Ardonagh
Nov 4, 2024
Illustration: Eniola Odetunde/Axios
U.K. insurance broker Ardonagh Group's financing round carried out earlier this year is a case in point about how public and private capital is converging.
Why it matters: The company's move put a spotlight on how banks and private credit firms can collaborate and compete at the same time.
Zoom in: In February, Ardonagh refinanced a $3.3 billion unitranche loan denominated in dollars, euro and Australian dollars with a club of 24 direct lenders.
- The Ares Management-led private credit group was initially slated to lend Ardonagh more than $5 billion.
- But a group of banks ended up managing a roughly $2 billion bond sale for the company. Since then, several cases have emerged where direct lenders and bank lenders work together on the same deal.
- "The market is extremely liquid," said Michael Dolce, partner and head of capital markets at Madison Dearborn Partners.
Catch up quick: Madison Dearborn first invested in Ardonagh in 2016. Private credit firm HPS is also an investor.
- Dolce tells Axios that the route Ardonagh took with both direct lenders and bank lenders combining on the same deal raised some eyebrows.
- "Everyone was skeptical, rightfully so. Why take that risk?" Dolce says.
- "You go from a small group of lenders to 150 lenders — you take out the private debt with syndicated loans and high-yield bonds."
Reality check: Dolce said Ardonagh's refinancing was unique given its business model and international footprint.
- Still, the demand in both the U.S. and abroad is real, and Ardonagh raised more than $5 billion in a short period at competitive pricing.
- "There's a lot of loan market money," Dolce says.
