(Bloomberg) -- Blackstone Inc. is considering tapping the securitized debt market to help finance its acquisition of a majority stake in Jersey Mike’s, according to people with knowledge of the matter.
The investment firm is looking to expand the sandwich chain’s existing whole-business securitization, the people said, asking not to be named discussing a private transaction. Discussions on the debt financing are still in early stages and details could change, the people added.
Blackstone agreed on Tuesday to buy the stake in Jersey Mike’s, which could value the company at about $8 billion including debt.
A representative for Blackstone declined to comment. A representative for Jersey Mike’s did not immediately comment.
With whole-business securitizations, a company pledges most of its assets, including franchise fees, as collateral to raise relatively cheap financing. This type of structured debt is popular among restaurant chains, fitness clubs and businesses with large networks of franchised stores. The securitizations are designed to allow businesses to pay down the principal over time, rather than at once.
While most private equity shops tap the broadly-syndicated leveraged loan and high-yield bond markets or private credit lenders to help finance buyouts, some have looked to the WBS market. Earlier this year, restaurant chain Subway sold a $3.35 billion WBS to help fund its buyout by Roark Capital Group.
Jersey Mike’s is a repeat issuer in the WBS market and borrowed $500 million in 2019, and again in 2021, with both deals led by Guggenheim Securities, Bloomberg previously reported.
A representative for Guggenheim declined to comment.
--With assistance from Jeannine Amodeo and Carmen Arroyo.
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