Cinven plots £600m CPA Global refi

Cinven is the latest firm to take advantage of helpful credit conditions by refinancing CPA - which will allow it to take out a dividend recap of about £180m after just 18 months of ownership.

Cinven is attempting to secure a refinancing in excess of £600 million for CPA Global, a patent service provider, according to a source familiar with the matter. 

As part of the refinancing, Cinven will be taking out a dividend of approximately £180 million, the source said. 

Cinven declined to comment. 

The refinancing will lower the company’s debt cost and potentially remove all maintenance covenants, creating a 'covenant-light' structure instead. 

The senior term loan B consists of a $365 million tranche and a €250 million tranche, while there will also be second lien term loan of approximately $300 million.  

Cinven bought the company for approximately £950 million in March 2012, with approximately £435 million of debt. At the time of the acquisition, the business’ debt load was 5.9 times EBITDA. 

Since then, the business has grown substantially: between 2009 and 2013 it recorded an annual compound growth rate of more than 20 percent. Due to CPA Global’s profitability, this has reduced this debt multiple to 3.9x, the source said. 

It is understood the refinancing will take the debt level of the business back to 5.9 times. The deal will be led by JP Morgan, Deutsche Bank and HSBC. Bank of Ireland and Mizuho will act as co-arrangers.  

Cinven is not the only GP taking advantage of eased credit conditions. In September, 3i Group secured a €275 million refinancing for Action, a Dutch discount retailer. It is understood IK Investment Partners has also done a refinancing of Minimax Viking in recent months, while Bridgepoint recently unveiled a £375 million refinancing for sandwich business Pret a Manger, which funded a £150 million pay-out to LPs. 

Dividend recaps are still on the increase in Europe, according to recent research by ratings agency Standard & Poor’s. In Q2, volumes reached €2.27 billion, compared to approximately €2 billion in Q1. In Q2, the majority of the total – about €1.5 billion – was financed by the bond market, with the remaining €770 million financed by the traditional loan market. 

That’s a substantial jump from Q1, where about €1 billion of recaps were financed via the bond market and the rest via the loan market, according to S&P. Overall, total European leverage finance issuance rose to €41.8 billion in Q2, up from €37.2 billion in Q1, according to S&P.