(Bloomberg) -- Goldman Sachs Group Inc.’s financing for Proofpoint Inc. is a small drop of water into the mouths of thirsty investors.
The $1.35 billion leveraged loan is one of just a couple of deals so far this year referred to as “new money” — meaning they are fresh loans or bonds and not just repricing or rearranging old debt into different terms, which has dominated volume.
Wall Street has been waiting for these types of transactions for a long time, as higher interest rates since 2022 led to fewer debt deals and suppressed corporate acquisitions. The Federal Reserve starting cutting rates last year, which has led to a slight uptick in activity, but mostly for refinancing.
For the Proofpoint loan, which is structured as floating-rate and due in 2028, pricing discussions are for 3.25-3.50 percentage points over the Secured Overnight Financing Rate, a person familiar with the matter said. It is being offered at a discounted price of 99.75 cents on the dollar, said the person, who asked not to be identified discussing a private deal.
Proofpoint increased the original loan amount from $1 billion to the new $1.35 billion size on robust investor demand and also hastened the timing of the deal. Lender commitments are now due Tuesday by 5pm Eastern Time, ahead of the prior Thursday deadline.
Proofpoint, a cybersecurity and compliance company, is a portfolio firm of private equity owner Thoma Bravo. Its loan is intended to fund a payment to Thoma Bravo and employees known as a shareholder dividend or distribution, a common tactic in which private equity sponsors pile debt onto a portfolio company in order to fund a payout.
Proofpoint’s loan is the second-largest deal in the primary market for dividend recaps after car battery maker Clarios International Inc.
Clarios, which is owned by shareholders including Brookfield Asset Management Ltd., is in the process of raising debt to fund a $4.5 billion dividend for its private equity owners.
On Tuesday, the company upsized one of two terms loans, taking the $2.5 billion term loan to $3.5 billion and tightened pricing on both loan tranches, as it slashed its bond offering by $500 million, sources familiar with the matter said.
Thoma Bravo acquired Sunnyvale, Calif.-based Proofpoint in 2021 for about $12.3 billion in cash. S&P Global affirmed its junk rating of B- last week after it announced the new financing.
Representatives for Goldman Sachs and Thoma Bravo declined to comment. A representative for Proofpoint did not immediately respond to a request for comment.
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