Private equity firms tap Europe’s junk debt market for dividend recapitalizations
Updated
Updated · Bloomberg · May 8
Private equity firms tap Europe’s junk debt market for dividend recapitalizations
8 articles · Updated · Bloomberg · May 8
Recent borrowers include Brookfield-backed REIT Befimmo, One Equity Partners’ Lutech SpA and Cooper Consumer Health, owned by a consortium including CVC.
The deals let buyout firms extract cash from portfolio companies as volatility in European credit markets makes traditional exits and sell-downs harder.
Bankers and investors expect more such junk-rated dividend recapitalizations soon, as the Iran war and AI-related market anxiety continue to unsettle financing conditions.
As private equity cashes out with debt, are their portfolio companies being primed for a future wave of bankruptcies?
With traditional exits blocked, why is the junk bond market so eager to fund private equity's risky cash-out strategy?
Is private equity using this strategy to exit software investments before AI renders them obsolete?