According to Yahoo News, Vista Equity Partners utilized a credit line backed by its private equity stakes to finance a cash injection for Finastra Group Holdings Ltd., enabling the software company to complete a crucial $5.3 billion debt refinancing. Sources familiar with the matter revealed that the private equity firm relied on a net asset value (NAV) loan to generate $1 billion of preferred equity to inject into Finastra.
The cash injection helped Vista resolve a deadlock with private credit firms over a multibillion-dollar debt refinancing for Finastra. A group of direct lenders led by Oak Hill Advisors eventually provided $5.3 billion to Finastra in what is considered the largest private credit package ever arranged. A spokesperson for Vista declined to comment on the matter.
Vista accessed the NAV line using one of the funds through which it holds its stake in Finastra, effectively reducing the portfolio company's debt load by borrowing at the fund level. NAV loans have been gaining popularity as a means for private equity firms to support portfolio firms, return capital to investors, or finance new investments. Companies in which the private equity funds own stakes are used as collateral for the loan. Lenders typically charge interest of between 550 and 700 basis points over base rates for NAV facilities with loan-to-value ratios of up to 30%.