RBS formalises three alternative tie-ups

Alice Murray
07 December 2015

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RBS has signed three separate agreements with investment partners AIG Asset Management, Hermes Investment Management and M&G Investments as a means of boosting its involvement in UK private equity.

These agreements allow for UK private-equity-backed companies to borrow up to £100m in a single transaction, which can be co-funded by all four lenders. RBS will typically deploy between £15-30m in each deal.

Each deal will be originated, led and coordinated by RBS, while each investment partner carries out their own credit analysis. For Hermes, AIG and M&G, the partnerships mark their first steps into the UK private equity credit arena.

The new tie-up has already signed three deals for UK private-equity-backed companies operating in the IT software, laundry services and casual dining sectors.

Richard Roach is head of financial sponsors at RBS. Geoff Cornell is deputy chief investment officer of AIG. Harriet Steel is global head of business development at Hermes Investment Management while James Pearce is head of direct lending at M&G Investments.

Agreements between traditional and non-traditional lenders have become increasingly common since alternative lenders started boosting their activities in the European private equity market. In January 2014, Barclays and BlueBay Asset Management joined forces in order to provide unitranche loans of up to £120m.

This latest tie-up highlights the continued development of the lending market for private equity deals, with banks needing to find ways to maintain their relevance as alternative lenders offer increasingly more attractive terms on leverage.