The owner of supermarket chain Morrisons has turned to non-bank lenders to fund a €2.7bn (£2.3bn) double-swoop on two outsourcers which employ thousands of people in Britain.
Sky News has learnt that Clayton Dubilier & Rice (CD&R) has obtained financing from Carlyle and HPS – rather than mainstream banks – to buy Atalian and the facilities management arm of OCS Group.
The funding arrangements underline the difficulty of obtaining debt from large banks for leveraged buyouts in an increasingly torrid market environment.
In recent months, takeovers of Boots, the pharmacy chain, and Parkdean Resorts have been aborted because of challenging market conditions.
Talks between CD&R and the owners of the two outsourcers, which were revealed by Sky News in May, have been ongoing for months.
Sources said the family backers of OCS and Atalian were assisting with the financing of the deals through the provision of vendor loans.
The businesses will operate under a joint ownership structure and create one of the world’s largest standalone facilities management groups.
John Hunter, OCS Group chief executive, said: “Our growth strategy, based on clear sector choices, has underpinned the transformation and growth of the OCS FS business over the last six years.
“CD&R’s reputation as a business builder, with extensive experience in the facilities services space and support to the business, will accelerate the delivery of our strategic ambitions”.
The OCS arm employs 68,000 people globally, highlighting the labour-intensive nature of the sector, while Atalian is significantly larger still.
CD&R has an extensive track record at investing in family-owned companies, and has been a prolific backer of companies in the business services sector.
Both Atalian Servest and OCS Group are owned by families, the latter having been founded in the early 20th century by Frederick William Goodcliffe as The New Century Window and General Cleaning Company.
Atalian Servest was formed from the £540m takeover in 2018 of Bury St Edmunds-based Servest by its French counterpart.
The two companies undertake work across thousands of sites, including Manchester City’s Etihad stadium as well as hospitals, courts and airports across the UK.
Last year, OCS won a contract to supply security staff to the 2022 Commonwealth Games in Birmingham, which get underway this week.
Listed support services companies on the London market include the likes of Mitie Group, which has also grown through significant acquisitions – most notably the purchase of Interserve’s large UK facilities management arm.
The private equity group has become one of the most prominent investors in British companies in recent years, and is currently in the process of exploring a sale of Motor Fuel Group, the UK’s biggest independent petrol retailer.
It won a bidding war for Morrisons against Fortress Investment Group, and has previously owned well-known British businesses such as B&M, the discount retailer.
CD&R declined to comment on the financing arrangements for the deal.