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(Bloomberg) — A group of high-profile private credit firms are lending €1.1 billion ($1.3 billion) to French business software firm Cegid, in a show of confidence in a sector that’s been rattled by an AI-induced selloff.
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Arcmont Asset Management and Ares Management Corp. are leading the loan to the Silver Lake Management-backed company, according to people familiar with the matter. Vista Credit Partners and PGIM Inc. are also involved in the financing, said the people, who asked not to be identified because the information is private.
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The proceeds will be used to finance Cegid’s acquisition of fintech Shine, a transaction whose close is expected to be announced as soon as Monday, the people said.
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The loan is priced at 550 basis points over the benchmark Euribor, with an original issue discount of 98 cents on the euro. The debt, which matures in 2030, replaces a bridge loan of the same size that was underwritten by Citigroup Inc., JPMorgan Chase & Co., Royal Bank of Canada and UBS Group AG.
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Representatives for Arcmont, Ares, Cegid and Silver Lake declined to comment. Representatives for PGIM and Vista didn’t immediately respond to requests for comment.
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Cegid, which first received investment from Silver Lake in 2016, says the acquisition of Shine will help it to service more than 1 million small and midsize businesses with enterprise resource=planning tools across major economies in Europe. Cegid said when it announced the deal that the combination with Shine creates “the first fully integrated, cloud-native and AI-driven financial hub.”
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The multitrillion-dollar private credit industry was hit with a fresh round of redemptions last week, with Blackstone Inc. and Cliffwater choosing to impose a 5% cap on outflows. Retail investors are jittery about the industry’s concentration in software lending, and private credit managers are realizing that convincing them otherwise is more of a marathon than a sprint.
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In Europe, funds managers are quick to distance themselves from the volatility in the US, with some pointing out that they have less exposure to software and retail investors, and are therefore a more attractive option for investors.
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French asset manager Eurazeo SE raised €3.9 billion for its latest flagship direct lending fund. Bridgepoint Group Plc is also poised to raise about €5 billion for its newest European direct-lending vehicle.
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—With assistance from Silas Brown.
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(Updates with Cegid decline to comment in fifth paragraph.)
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