Credit specialists CVC Credit Partners and EQT have partnered up on a £110 million ($137 million; €128 million) unitranche debt transaction.
The borrower, Paymentsense, is a UK-headquartered card processing company that provides services to small and medium-sized businesses, which the company says have been “underserved and overcharged” by larger providers.
Paymentsense has worked with more than 50,000 SMEs in the UK and processes £5 billion of payments every year, according to a press statement. It is not backed by a private equity sponsor.
CVC declined to comment further on the details of the transaction. EQT did not immediately respond to a request for further comment.
The deal further shows how alternative lenders are entering the sponsorless space. Increasingly firms are raising funds for sponsorless-mandated vehicles. UK-based Beechbrook is expected to reach a final close of £200 million by the end of this year, while on the continental mainland Capzanine is hoping to collect €350 million for its own fund targeting sponsorless deals.
Chris Fowler, a managing director at CVC’s direct lending business and who was closely involved in the Paymentsense deal, told PDI that the sponsorless market is a “huge, untapped market that is currently predominantly served by banks”.
“It is a challenging area of the market, both in terms of deal sourcing and execution. Often, borrowers may not have direct experience of raising alternative financing and therefore due diligence can sometimes be a bit slower.
“There is also the need to educate the borrowers on the benefits of alternative sources of financing, because these are companies that have only ever had relationships with their local banks – but the awareness and interest among borrowers is growing,” he added.
Andrew Cleland-Bogle, director in EQT’s mid-market credit team, said: “Paymentsense is a best-in-class operator and exemplifies how non-sponsor backed companies can also avail of private debt capital to support their growth aspirations with tailored and flexible financing packages.”