Private equity firm Carlyle will raise $ 1 billion in debt through an offshore bond issue to fund its nearly $ 3 billion acquisition of IT services firm Hexaware Technologies.
The debt offer proposed by CA Magnum Holdings (CAMH), a special purpose investment holding company created for the acquisition, received a B1 rating, international rating agency Moody’s said in a note on Friday.
The B1 rating is a lower rating than the investment category. The bonds mature in 2026.
mint first reported on September 5 that Carlyle was in talks with banks to raise $ 1 billion in debt to fund the Hexaware buyout.
“The proceeds from the proposed bond will initially be held in an escrow account and will ultimately be used to fund CAMH’s planned acquisition of a 95.42% interest in Hexaware. If the proposed acquisition does not go as planned, CAMH will repay the bonds in full, as well as all accrued and unpaid interest, largely using the proceeds from the escrow account, ”Moody’s said.
CAMH’s rating reflects Hexaware’s credit standing, as Hexaware will be the sole source of cash flow to service its debt, the rating agency added.
“Hexaware’s resilient business profile, supported by favorable winds from the pandemic leading to accelerated digitization of business processes as well as its high conversion of EBITDA to cash flow and high liquidity, also supports CAMH’s rating,” said Moody’s analyst Sweta Patodia said.
Hexaware serves clients in the growing digital solutions segment within the IT services industry, including digital product engineering, core digital transformation, enterprise and next-generation services, transformation in the cloud and data analytics.
In line with the growing demand for such services, Moody’s expects Hexaware’s operating performance to remain strong and the company’s revenues to grow by 14-15% annually over the next two to three years. , said the rating agency.
