(Bloomberg) -- KKR & Co. is turning to direct lenders to help finance its $1.6 billion acquisition of valve and pump maker Circor International Inc., according to people with knowledge of the situation. 

The buyout firm’s own capital markets division is leading the $650 million debt financing, according to one of the people, who asked not to be identified discussing a private transaction. The debt will be sold to other direct lenders, and pricing was finalized at 600 basis points over the Secured Overnight Financing Rate, the people said.

A representative for KKR declined to comment. A representative for Circor International didn’t immediately respond to requests for comment.

The deal is the latest example of a sponsor looking for financing options beyond the broadly syndicated loan and junk-bond markets, which remain choppy. Sales of loans to fund buyouts have fallen this year in part because deal activity has slowed, and also due to banks losing some business to private credit firms.

Read more: KKR Expects Big Private Credit Deals to Keep Coming Forward

According to a statement, KKR is purchasing the Burlington, Massachusetts-based company through its North America Fund XIII. Shareholders will receive $49 per share in cash, and the deal is expected to close in the fourth quarter, pending shareholder and regulatory approval. 

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