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CapVest nets ~$1B debt, equity financing from Blackstone for Datasite buyout

Blackstone Credit is backing CapVest's acquisition of U.S.-based provider of software for M&A dealmakers Datasite Global Corp. through an innovative $1 billion debt and equity financing that will also bring a cross-border loan financing after the Thanksgiving break.

CapVest announced the buyout from shareholders led by lenders from a 2013 restructuring in a statement last month.

To support the deal, Blackstone has provided a debt and equity financing that includes a $950 million-equivalent unitranche loan. The plan is now to take this out partly with a first-lien cross-border loan that will come with a roughly 4x-4.5x leverage multiple and convert the remainder into a preferred/payment-in-kind, or PIK, style instrument. J.P. Morgan is mandated to lead the new debt that will launch once the U.S. market is back from its November holiday. In the absence of a loan take-out, the unitranche financing will remain in place.

The unusual structure was designed to allow the sponsor to move at a speed and discretion to clinch a deal that was not initially due to emerge until next year. Datasite was earmarked for sale, but owners including Bain Capital and Davidson Kempner were expected to wait for markets to settle into the new year before starting an auction, only opting to bring forward their plans after the fully funded approach from CapVest. The deal is the first major investment in a U.S.-headquartered business for CapVest, which is primarily know for mid-market deals in Europe. Datasite is based in Minneapolis but operates globally in 25 locations across 13 countries.

The new deal is not, however, without precedent, and the private equity group has previously worked with Blackstone to support its ambitions. In 2017 CapVest tapped then-GSO to provide a $500 million unitranche alongside an equity investment to support the merger of IBA Molecular and Mallinckrodt's nuclear imaging business to create Curium. The France-based business earns around 50% of its revenues in the U.S and has since refinanced through cross-border syndicated loans. Blackstone has also moved in size to support other sponsors, and last year provided a €775 million-equivalent dollar-denominated facility alongside a €700 million euro-denominated syndicated tranche that backed Lone Star's acquisition of construction chemicals business Skyscraper from BASF.

Sources say CapVest could have gone down the underwritten route to support this acquisition, though this may have limited its room for maneuver. Datasite was previously known as Merrill Corp and is an existing borrower, having last been in the market in September last year when it completed a $400 million dividend recap deal at L+500 with a 1% floor. Banks too are once again looking for mandates — especially in COVID-resilient sectors — with competition said to be stepping up a notch following the recent vaccine-led rally in risk assets. In the secondary, Datasite's loan was quoted in a 97.625/98.625 market before moving to hug par once news of the acquisition broke. Existing ratings are B/B2.

Datasite is a global software-as-a-service provider that allows users to create virtual datarooms across the life cycle in mergers and acquisitions. William Blair advised CapVest while Goldman Sachs advised the company.