Private equity shops have been taking advantage of investor demand in the European leveraged finance space to pay themselves some hefty dividends in 2017.
So far this year, PE firms have recouped €4.2 billion of cash via the European leveraged loan market and €1.3 billion via the European high yield bond market via dividend deals, according to LCD. At €5.5 billion total, this is already higher than all post-crisis full-year figures, other than the €6.1 billion in 2013. During all of 2016, sponsors took out roughly €3.4 billion via the leveraged finance market (€2.8 billion via loans, and €655 million via bonds).
Dividend/recaps is one form of opportunistic issuance that blossoms when the leveraged finance market is especially hot (i.e., when institutional investors are flush with cash, and eager to put that money to work). Consequently, private equity shops can lever-up portfolio companies with the newly incurred debt, paying themselves often hefty dividends in the process.
This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.