Oaktree, GFI Tap Barclays To Power InfraSource Buyout

  • 29 Jun 2003
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Oaktree Capital and GFI Energy Ventures, co-general partners on the OCM/GFI Power Opportunities Fund, have tapped Barclays Bank to finance the buyout of InfraSource--a subsidiary of Chicago-based Exelon Corp. The fund is buying the electric construction and services, underground and telecom businesses of Infrasource for approximately $250 million in cash and $30 million in subordinated notes maturing in 2011. Barclays was chosen not only on the basis of its flexible terms, but also because of its knowledge and good reputation within the power and utility sector, said Lawrence Gilson, chairman of GFI Energy Ventures.

A major reason that Barclays won the bid as sole bookrunner for the deal was the bank's success in leading a similar $210 million credit last year for electrical contractor Pike Electric, noted Ian Schapiro, founding principal of GFI. Also, Barclays offered the longest term and the least amount of principal amortization requirements for the InfraSource financing, explained Schapiro. Three other banks competed to offer the financing, but he would not cite any competing lead banks. He could not comment on whether he perceived that Barclays is stepping up to finance more buyouts, but said, "Barclays was certainly very aggressive [in order to win this deal]."

A banker familiar with the deal said the structure would most likely include a $140 million "B" loan and a $40 million revolver. The banker did not discuss price talk because the lead bank was "still putting the package together." The two sponsors are putting up $95 million in equity. The deal is not scheduled to launch syndication until after the July 4 holiday, he noted. A Barclays official declined comment.

The purchase of InfraSource is a natural convergence of the fund's industry focus as well as its view of the way the industry is evolving, stated Gilson. OCM/GFI Power Opportunites Fund is focused in particular on companies providing products, services and systems to support infrastructure and InfraSource is a leading provider of transmission and distribution infrastructure services, he explained. It was important to buy InfraSource now because the financial challenges of the utilities market have led to a deferral of investment in the transmission and distribution area, so there is a lot of pent-up demand, Gilson noted. Furthermore, Exelon wanted to focus its business elsewhere, he added. "InfraSource will be able to take full advantage of its reputation, and will blossom when it is not competing for resources with other parts of Exelon," he explained. The deal is expected to close in the third or fourth quarter of 2003.

  • 29 Jun 2003

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Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Citi 7,029 20 10.95
2 Bank of America Merrill Lynch (BAML) 6,703 19 10.45
3 JP Morgan 4,776 10 7.44
4 Credit Suisse 4,718 9 7.35
5 Deutsche Bank 4,262 13 6.64

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1 Wells Fargo Securities 67,591.81 167 11.54%
2 Bank of America Merrill Lynch 57,568.62 162 9.83%
3 JPMorgan 55,390.36 159 9.46%
4 Citi 55,051.46 160 9.40%
5 Credit Suisse 43,756.73 120 7.47%