Lending giants back financing to aid transition to private ownership
Royal Bank of Canada and Deutsche Bank are arranging a $4.5 billion debt financing package to support the acquisition of R1 RCM Inc. by TowerBrook Capital Partners and Clayton Dubilier & Rice (CD&R).
According to Bloomberg, citing sources familiar with the transaction, the financing may include a leveraged loan of up to $4.1 billion, potentially making it the second-largest loan for a buyout this year, following the financing for Cotiviti Inc.
The acquisition of R1 RCM, a provider of billing and payment solutions for hospitals, is expected to close by the end of the year. The deal assigns an enterprise value of $8.9 billion to the Salt Lake City-based company, in which TowerBrook currently holds a 36% stake.
The financing for the deal will comprise committed debt from Deutsche Bank and RBC, alongside equity contributions from investment funds associated with TowerBrook and CD&R.
Once the transaction is completed, R1 RCM will become a private company, and its shares will be delisted from Nasdaq.
“Our agreement reflects TowerBrook’s and CD&R’s confidence in our team and the unmatched scale, technology and value we provide,” R1 CEO Lee Rivas said in a Press release. “We believe the transaction represents the best path forward for R1 at an attractive valuation to our stockholders that reflects the company’s position as a leading provider of technology-driven solutions for its customers.”
“As a long-term, responsible investor in R1, TowerBrook has supported the development of R1 as a leader in healthcare provider revenue management since 2016,” added Ian Sacks, managing director at TowerBrook. “Together with CD&R, we look forward to continuing to invest in the company’s core operations to drive customer performance and value while also continuing to build R1 as a leader in intelligent automation and in the use of GAI in revenue management.”
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The deal comes as buyout financing shows signs of a comeback in the leveraged debt capital markets. The sector had experienced a downturn due to rising interest rates and differing valuation expectations between buyers and sellers.
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