Deals

Ares agrees £1bn loan for UK IT company

The refinancing of Daisy Group shows the ability of private credit to extend huge loans that could not be provided by a bank.

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Ares Management has made a more than £1 billion loan to UK-based technology services specialist Daisy Group to back a management buyout.

The loan is thought to be one of the largest private credit transactions in Europe and will see Ares become the sole lender to the company, which provides telecoms, IT and cloud services to UK business customers.

The deal will refinance Daisy’s existing credit facilities and support the company’s founder and chairman, Matthew Riley, in buying out a minority investor in the company. The financing will also provide additional capital to support the firm’s future growth.

Ares made the loan from multiple funds within its European Direct Lending Group. It most recently closed Ares Capital Europe IV last year at it €6.5 billion hard cap, stating the vehicle could lend up to €10 billion with leverage.

The loan is not the first time Ares has dealt with Daisy, having provided junior capital in 2014 to support the company’s take-private alongside a bank-led senior debt syndicate. Ares has since supported several add-on financings for the company to support its expansion strategy.

Michael Dennis, co-head of the Ares European direct lending strategy, said: “We have worked closely with [Riley] and his management team for a number of years and on several transactions, which is key to our strategy of continuing to invest behind and support incumbent borrowers.

“In fact, of the €5.9 billion of European direct lending commitments we made last year, 59 percent involved existing portfolio companies.”

The size of the deal shows the growing capability of the largest private debt players to finance large companies and act as a sole lender. Ares Management is one of the most successful private debt fundraisers globally and was placed fourth in the 2018 PDI 50 ranking of the world’s biggest private credit players.

Daisy was founded in 2001 by Riley and today has 360,000 indirect and direct customers, 2,100 partners, 4,000 employees and operates in more than 30 locations across the UK.