When private equity imitates portfolio company's customers

Friday, 17 March 2017, 9:48 am

Refinancing stories aren't exactly front page news but I have stumbled across one that is vaguely interesting.

I understand that London-based private equity firm Phoenix Equity Partners has got bankers over at Evercore working on a major refinancing of Key Retirement.

Now, I suspect many of Betaville's of readers wouldn't have heard of Key Retirement, so let me explain what it does: the company specialises in selling equity release mortgages (also known as lifetime mortgages) to older folk, allowing them to take cash out of their homes to fund their retirement.

And it would appear Phoenix is looking to do something similar with its investment in Key Retirement. Typically, private equity firms carry out refinancings so they can carry out "dividend recapilisations", which is when the buy-out firm loads the portfolio company up with more debt and pays a dividend to investors.

Phoenix paid around £35 million for Key Retirement a couple of years but I'm told by bankers it now generates around £20 million of EBITDA, so it could be worth around £200 million.

That will be quite some dividend then!

Phoenix Equity Partners declined to comment...

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