HPS to Lend $1 Billion for Health Care M&A in Private Debt Push

(Bloomberg) -- HPS Investment Partners has committed to provide about $1 billion of debt to support two health care acquisitions in the past week as private credit lenders continue to stake their claims on bigger deals.

The alternative investment firm, headquartered in New York, has agreed to provide a $450 million term loan and a $65 million revolver to help finance the acquisition of dialysis clinic operator American Renal Associates Holdings Inc. by Nautic Partners LLC, according to a person with knowledge of the deal.

It's also the sole lender for the acquisition of Amag Pharmaceuticals Inc. by Apollo Global Management-backed Covis Pharma, said the person, who asked not to be identified discussing a private matter. The new financing consists of a $460 million incremental term loan that will almost double the current size of the debt, and a $55 million secured revolver, according to a Thursday statement.

Representatives for HPS, American Renal and Covis Pharma declined to comment.

HPS, which manages strategies including syndicated leveraged loans, high-yield bonds, privately negotiated senior secured debt and asset-based leasing, made headlines earlier this year when it swooped in to provide a $1 billion loan to Canadian plane and train maker Bombardier Inc., a large deal by private credit standards.

The pandemic has helped reshape the shadow lending market with bigger loans to bigger companies emerging. Direct lenders -- an assortment of private-equity firms and other asset managers that aren't subject to the same regulatory scrutiny as big banks -- have been able to boost their share of the overall loan business as Wall Street firms have stepped back.

Read more: Billion dollar deals see private credit step out of the shadows

HPS, founded in 2007 and originally formed as a division of Highbridge Capital Management within JPMorgan Asset Management, has deployed about $9 billion in private credit since the onset of the coronavirus outbreak in the U.S., according to the person. That doesn't count other activity in public credit and secondary markets.

Most of its recent private debt activity has been in direct lending, for industries including health care and technology, and to both private equity-backed and non-sponsored companies. Only a handful of its deals have been rescue finance situations.

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