Private Equity Taps Lending Power of Three to Finance Mega Deals

A long-awaited revival in M&A has been a boon to leveraged finance desks on Wall Street — bringing them $500 million of fees on a single deal. But increasingly they’re having to share the spoils.

Borrowers have started to use a hybrid financing model that combines three sources of cash: institutional, bank and private credit. It’s an arrangement that works out well for private equity firms and their companies, allowing them to stretch leverage, push more aggressive terms and drive pricing down.

Tal Reback

Photographer: Kyle Grillot/Bloomberg

“Now borrowers are looking at blended debt deals, which is positive as it diversifies where the financing ...