Sponsors set to plug funding gap with PIKs as valuations soar

By Owen Sanderson
23 Sep 2020

Payment in kind notes and preference shares will likely play an increased role in new leveraged buyout structures, as sponsors seek to bridge the gap to ever more stretched equity valuations against a backdrop of depressed earnings.

As the market plunged in March, sponsors sought to shore up their existing portfolio companies but also anticipated a bumper year for deal making, as record levels of dry powder combined with huge dislocation in public markets meant bargains should have been available.

But the rapid recovery, with ...

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