Goldman Is Pitching a Risky $500 Million PIK Deal to Pay Itself

A Canadian benefits provider owned by Goldman Sachs Group Inc. is seeking around $500 million from private credit lenders to finance a payout to shareholders, according to people with knowledge of the matter.

The financing for People Corp. would be in the form of a payment-in-kind note tied to a holding company, allowing it to defer paying its interest in cash, said the people, who asked not to be identified discussing private information.

As the market for traditional exits such as mergers and acquisitions has slowed, private equity firms are tapping debt to distribute a dividend to investors. The volume ...