(Bloomberg) -- Private credit fund manager Blackstone Inc. is nearing a deal to provide a debt package of more than €250 million ($329 million) to refinance the existing debt of Wateralia SpA, in the latest example of an Italian borrower seeking financing from a direct lender.
The Italian water pumps specialist picked the private credit fund to replace its existing pool of banks when needing fresh debt, according to people familiar the matter, who asked not to be identified as they aren’t authorized to speak publicly on the situation. The package is expected to feature drawn debt of €250 million and a delayed draw debt of around €50 million, one of the people said.
Wateralia, owned by private equity firm Ambienta SGR SpA, needed to refinance its debt partially as a result of its recent acquisition of German peer Calpeda Pumpen.
Bank lenders have traditionally dominated the Italian market as domestic regulation requires private credit funds to finance deals as bonds rather than loans. That cumbersome — and expensive — procedure has limited their appeal. But with private credit lenders under pressure to deploy capital amid sluggish M&A and record amounts of dry powder, borrowing terms have eased enough to interest Italian companies.
Lazard Inc. advised the company through the refinancing process. The bank providers whose debt will be refinanced by Blackstone include Credit Agricole SA, Intesa Sanpaolo SpA, BNP Paribas SA and Banco BPM SpA.
Representatives for Blackstone and Credit Agricole declined to comment. Spokespeople for Wateralia, Lazard, Intesa, BNP Paribas and Banco BPM didn’t immediately respond to requests for comment.
In 2021 Ambienta acquired pumps specialist Caprari and created its parent company Wateralia, a holding company which conducts acquisitions in the water sector. A private credit debt solution is typically well-suited for businesses looking to grow via acquisitions of peers, as private debt funds can provide more generous acquisition lines than banks and do so more quickly.
Other Italian companies that have used the direct lending market in the past months include provider of manufacturing services to pharmaceutical companies Masco Group, corporate consultant Excellera Advisory Group and insurance broker GBSAPRI.
To be sure, when private credit and banks debt options are both on the table, private equity firms investing in Italy oftentimes still pick bank debt over a private credit solution, like in the case of Forno d’Asolo in the first half of the year.
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