Private credit funds are scaling up as investors flock in. The acquisition of Stamps.com for $6.6 billion by Thoma Bravo required $2.6 billion in debt financing. Not a single traditional lender was involved. Ares, Blackstone and PSP Investments are working with Thoma Bravo’s own lending arm to close the debt raise.
It is typically cheaper to borrow through bonds or loans syndicated by banks, but for a live transaction, private equity funds are willing to pay up:
“You pay up slightly [for private credit funding], but it’s insurance cost,” said one banker involved in debt syndications. “You know you can get a deal done with them. You are paying for certainty. In a volatile or uncertain market you are willing to pay that.”