Apollo to lend $5.5b to SoftBank in private credit deal

BROOKLYN – Apollo Global Management is planning to lend about US$4 billion (S$5.5 billion) to Group, marking the biggest ever loan of its kind in the credit market, according to people with knowledge of the matter.

The financing will be backed by holdings of SoftBank Vision Fund 2, which has made a range of equity investments in technology start-ups, the people added, asking not to be named discussing a private transaction.

Terms are not yet final, but the US$4 billion in borrowings would compare with the fund's holdings of about US$40 billion, one of the people said. The interest rate on the loan is expected to be in the mid-single-digit per cent range, the people added.

Apollo, along with its insurance affiliate Athene Holding, are leading the deal, and a group of additional investors including mutual funds, endowments and financial institutions will also be part of the transaction, they said.

Representatives from SoftBank and Apollo declined to comment. The Wall Street Journal first reported the transaction.

The loan is a unitranche financing, meaning it blends first-priority and second-priority loans into a single facility.

At US$4 billion, it marks the biggest such deal on record, according to data compiled by Bloomberg. It surpasses a US$2.6 billion private loan that helped finance private equity firm Thoma Bravo's buyout of Stamps.com, and another US$2.6 billion unitranche that was part of a broader US$3.4 billion debt financing provided to Galway Insurance to fund in part its takeover of MAI Capital Management.

These types of large financings are becoming an increasingly common alternative to syndicated loans for funding leveraged buyouts.

SoftBank Vision Fund 2 has invested over US$27 billion across more than 150 companies including InMobi, a mobile phone advertising company, and AutoStore, a robotic warehouse storage company, as at Sep 30, according to a presentation.

Some of Vision Fund 2's portfolio companies such as JD Logistics are public, while others, like eToro, have struck deals to become public, creating liquidity.

The vehicle had US$42 billion in committed capital as at Sep 30, the presentation showed. Vision Fund 2 counts SoftBank and its billionaire founder and chairman Masayoshi Son as key investors.

SoftBank's first Vision Fund also borrowed against its holdings. The vehicle leaned on a roster of banks for margin loans on its South Korean e-commerce giant Coupang, and food-delivery service DoorDash to help fund distributions to investors, including sovereign wealth funds from Saudi Arabia and Abu Dhabi, Bloomberg News reported in October.

In 2019, the first Vision Fund separately borrowed roughly US$4 billion by pledging stakes in two companies including Uber Technologies.

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