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‘Game-changer’ deal for Aus debt market complete

‘Game-changer’ deal for Aus debt market complete

Building blocks

A national law firm has revealed it has advised Australian Technology Innovators Pty Ltd in what is being described as a landmark deal for the Australian debt market.

Firm: Clayton Utz (Australian Technology Innovators Pty Ltd); King & Wood Mallesons (Goldman Sachs and J.P. Morgan)

Deal: Australian Technology Innovators Pty Ltd (ATI) has been advised on its $350 million Term Loan B (TLB) raising.

Value: $350 million

Area: Finance

Key players: The Clayton Utz team was led by capital markets and finance partners Stuart Byrne and Alex Schlosser. The pair were assisted by a team of special counsel, senior associates and lawyers comprising Kate O'Donovan, Patricia Paton, Steve Siopis, Annella Cox and Jeffrey Tang.

The King & Wood Mallesons team was led by banking partner Yuen-Yee Cho, supported by senior associate Jason Byrne and solicitors Zoe Anderson, Karen Chen and Jing Wang from banking. Specialist IT/IP assistance was provided by partner Patrick Gunning and senior associates Nick Sinclair and Melissa Miller. 

Deal significance: According to a statement from Clayton Utz partner Stuart Byrne, this deal represents the first stand-alone domestic TLB deal for a corporate borrower which is both Australian-dollar denominated and also governed by Australian-law, and is a “game-changer”.

Partner Alex Schlosser echoed this sentiment.

In the past, we’ve seen private equity sponsors and certain Australian corporate borrowers tapping into the US TLB market where the transactions were either US$ denominated and then swapped back into A$, or more recently, A$ denominated but still governed by New York law,” he said.

“As a fully Australian-law deal, the ATI deal is a clear sign that the institutional lending market has come of age in Australia, which is likely to encourage more corporate borrowers in Australia to tap the ‘covenant-lite’ terms of the TLB market.

Mr Schlosser noted that the “shift towards institutional investors taking a greater share of the term lending market in Australia had been long expected, with tighter capital and liquidity requirements under Basel III likely contributing to the increased uptake of term debt by institutional non-bank lenders”.

While we are seeing a large proportion of institutional debt coming from offshore, there has also been some exceptional growth in the Australian institutional debt market, he said.

In addition, Mr Byrne said InfoTrack and LEAP Legal Software, which use modern software-as-a-service (SaaS) models, were both successful Australian technology companies that were examples of the growing technology-led sector of the Australian economy.

“LEAP Legal Software is the exclusive Australian provider of the LEAP legal practice management software, and InfoTrack provides a premium cloud-based integrated search and services platform for professionals, he said.

“It’s always exciting acting for growing tech companies like ATI, LEAP Legal Software and InfoTrack, and even more so when the entire team is working together to execute innovative transactions like this Australian TLB.”

King & Wood Mallesons advised joint lead arrangers and bookrunners Goldman Sachs and J.P. Morgan on the deal. 

“KWM are delighted at the opportunity to work on this significant transaction in the developing A$-denominated covenant lite loan market,” said partner Yuen-Yee Cho. 

The product connects domestic and international institutional debt investors with Australian corporates, providing them with a wider choice of financing options.”

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