(Bloomberg) -- Morgan Stanley and Goldman Sachs Group Inc.’s attempt to elbow their way into a multi-billion financing for Ardonagh Group Ltd. shows banks are back in the world of leveraged finance. It also shows private credit is here to stay.

The banks swayed the UK insurance broker to divert nearly half of a $5 billion financing that private lenders led by Ares Management Corp. had agreed to provide to the broadly syndicated market, where junk bonds have staged a rally in recent weeks. Ardonagh is now looking to raise $2 billion through a sale of secured and unsecured bonds on both sides of the Atlantic that kicked off on Thursday. It will receive only $3 billion through a private loan.

The last-minute tweak to the financing, which came together over the past three weeks, dashed hopes of setting a record in the private market and forced direct lenders and Wall Street banks to share fees from one of the year’s marquee transactions. For Ardonagh, the hybrid solution preserved access to several financing avenues in what bankers and private credit managers say could become a new blueprint for other large, high-quality borrowers.

Read more: Morgan Stanley, Goldman Spoil Private Credit’s Record Deal

Ardonagh’s about-turn from private credit was not always the plan, people with knowledge of the matter said. While talks with direct lenders began late last year, it wasn’t until January that the junk-bond markets started to recover as investors became more confident of rate cuts on the horizon. Last week, Howden Group Plc, another insurance broker, priced $1.5 billion of bonds in what was seen as the ultimate sign a bond deal for Ardonagh would be well-received, said the people, asking not to be identified because the discussions are private.

It helped that Mike Dolce, head of capital markets at Madison Dearborn Partners, the private equity firm that jointly owns Ardonagh with HPS Investment Partners, was managing the debt-raise. Dolce cut his teeth on the leveraged finance desk at Bank of America Corp. and, according to the people, played a key role in corralling private lenders and Wall Street bankers behind the deal. 

Representatives for Goldman Sachs, Madison Dearborn, HPS and Ares declined to comment. Ardonagh and Morgan Stanley did not immediately respond to requests for comment.

Hybrid Deals

Investment banks are re-emerging as a force to be reckoned with in leveraged finance, after 18 months of being out-played by the burgeoning $1.7 trillion private credit market. 

Hybrid capital structures, with private credit and high-yield debt sitting side-by-side, are rare. During market dislocations, borrowers have often raised secured debt in the syndicated markets and relied on private lenders for more junior types of capital. The opposite has happened only in a handful of situations, according to market participants. 

Biofarma, an Italian medical manufacturer which has high-yield debt outstanding, took out a roughly $350 million private loan last year that sits on the same level as the existing bonds, Bloomberg News previously reported. Other issuers like Copeland, a division of Emerson Electric Co. that Blackstone Inc. acquired last year, and Wood Mackenzie, have treated the private credit and syndicated debt markets as alternative rather than complementary options.

Aymen Mahmoud, co-head of the finance, restructuring and special situations group in London for law firm McDermott Will & Emery, said he fully expects more of the type of hybrid deals Ardonagh is pursuing.

“As well as providing the buy-side with the flexibility to optimize capital structures, the combination of available dry powder in public markets and both the availability and dominance of private credit, even where financing the largest structures, will make this set up a very attractive option for many businesses,” he said in an interview.


  • Private credit lenders and investment banks are in talks to provide funding for the acquisition of a portion of the media rights for Germany’s top football league
  • A trio of banks including BNP Paribas SA has underwritten an €800 million debt package to back the purchase of Italian bakery Forno d’Asolo SpA to a consortium backed by Investindustrial and the Bagnoli family
  • Deutsche Bank AG and DBS Group Holdings Ltd. have stepped in to provide fresh financing to Canadian International School, replacing a loan the education company had received from BlackRock Inc.’s private credit unit
  • Direct lenders and banks are working on proposals to provide a debt package worth at least €1.2 billion for Siemens AG’s Innomotics business as the German engineering firm weighs a potential sale among other options
  • A group of private equity firms including Ardian, Cobepa, Dentressangle, IK and Latour are separately considering bids for the French business Eurofeu
  • Public Hospitality Group, an Australian operator of restaurants and hotels, is in talks with Bain Capital and property credit fund Madigan Capital to refinance maturing debt
  • The Zee family, a Hong Kong project developer, sought HK$1 billion to HK$1.5 billion of private financing, with HSBC Holdings Plc as the sole arranger
  • KKR & Co. is considering using the leveraged finance market to refinance an €800 million loan provided by private credit firms to fund its purchase of Ivirma Global
  • Banks and private lenders are lining up as much as €1.2 billion of debt financing to back a potential buyout of luxury-watch parts maker Acrotec Group
  • Deutsche Fachpflege’s €420 million term loan will be used to refinance a unitranche provided by Hayfin Capital Management


  • Metrics Credit Partners, an Australian credit fund manager, is seeking to raise a bank loan of at least A$250 million for its Metrics Credit Partners Diversified Australian Senior Loan Fund
  • Blackstone is opening its retail private credit fund ECRED to wealthy investors in France as part of a move to lure rich Europeans
  • Van Eck Associates Corp. has launched a private credit exchange-traded fund in Australia, the first of its kind in the market
  • Over half of LPs surveyed by data provider Preqin said they want to increase their allocations to private credit strategies in the next 12 months

Job Moves

  • Amundi SA has hired Amelie Guillon as investment director to strengthen its private debt team
  • BlackRock’s former head of global infrastructure and real estate, Anne Valentine Andrews, was hired by Manulife Financial Corp.’s asset-management unit to lead private markets

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