Robert F. Smith’s Vista Equity Partners tapped Goldman for $1 billion Finastra cash injection

Bloomberg | Vista Equity Partners tapped a credit line backed by its private equity stakes to finance a cash injection for Finastra Group Holdings Ltd. that allowed the software company to pull off a key US$5.3 billion debt refinancing, according to people with knowledge of the matter.

The private equity firm relied on a net asset value loan – a type of financing that buyout shops can obtain against the value of their funds – to come up with US$1 billion of preferred equity to inject into Finastra, said the people, who asked not to be identified discussing confidential deal information.

Goldman Sachs Group Inc. led the NAV loan, which is secured by the investments held in Vista’s Fund VI, according to filings with the state of California. This is one of the funds through which Vista holds its stake in Finastra, the people said, meaning Vista essentially reduced the portfolio company’s debt load by borrowing at the fund level.

The cash helped Vista break an impasse with private credit firms over a multibillion-dollar debt refinancing for Finastra. A group of direct lenders led by Oak Hill Advisors ultimately provided US$5.3 billion to Finastra in what ranks as the largest private credit package ever arranged.

Representatives for Vista and Goldman Sachs declined to comment.

NAV loans have been growing in popularity as a way for private equity firms to shore up portfolio firms, return capital to investors or finance new investments. Companies in which the private equity funds own stakes are used as collateral for the loan. Lenders typically charge interest of between 550 and 700 basis points over base rates for NAV facilities with loan-to-value ratios of as much as 30 percent.