Built to order
When Barclays brought on-demand legal talent platform Axiom Global to market, the investment bank put together a tailor-made execution strategy that served several needs.
The loan was met with strong demand from investors despite significant challenges.
The borrower operates in a segment previously unknown to investors, and it launched during a particularly turbulent period in the syndicated loan market.
Axiom has disrupted the legal landscape by filling the need for legal services that exists between big corporate law firms and in-house legal teams. The Axiom platform essentially connects a deep “bench” of approximately 2,000 attorneys with more than 900 corporate clients.
Barclays knew investors would need an opportunity to get close to the deal, dig in to the credit, and gain an intimate understanding of the business and its prospects for growth.
“We wanted to bring people closer. We started with small group meetings, which were right-sized for the opportunity,” said Mike Masters, managing director at Barclays, adding that the deal was “a lightly syndicated loan”.
As other borrowers tapping the syndicated loan market faced headwinds courting cautious investors, Axiom found success.
“We increased leverage, upsizing the deal by almost a full turn of leverage, and also tightened pricing at the same time,” Masters said.
Barclays was lead arranger and bookrunner on the US$235m senior secured credit facility, which backs the company’s takeover by Permira and funded cash to the balance sheet that will support the Axiom’s expansion.
The deal comprised a US$25m revolving credit and a US$210m first-lien term loan. The seven-year term loan was increased by US$35m during syndication and pricing finalised at 475bp over Libor from initial guidance of 500bp–525bp. The covenant-lite, non-rated loan sold at a 99 original issue discount.
From 2008–2018 Axiom saw annual growth rate of 17%, and in a recessionary environment when corporates have been scaling back costs, Axiom provides a cost-effective alternative for legal services, making the company a non-cyclical business.
Not everyone was on board with a covenant-lite deal for a company with adjusted Ebitda of US$40m, but others found comfort in the significant equity cushion and the company’s opportunities for scale and growth, Masters said.
“It was intimate, but it was competitive, and the execution helped drive a better-than-expected outcome,” said Masters.
To see the digital version of this report, please click here
To purchase printed copies or a PDF of this report, please email email@example.com