The acquisition of Miller Homes Group Holdings PLC by funds managed by Apollo will predominately be funded via sterling bonds which are likely to launch in the first quarter, according to sources familiar with the transaction.
The New York private equity firm announced on Dec. 24, 2021, that it has agreed to purchase the U.K. housebuilder from London-listed investment group Bridgepoint. Financial terms of the deal have not been disclosed, although the Financial Times has reported that Apollo will pay in excess of £1.2 billion for the company.
Barclays and HSBC are serving as financial advisers to Apollo, while Sidley Austin is the firm's legal adviser. Rothschild and Co. and Moelis & Co. LLC are financial advisers to Bridgepoint, and Travers Smith is acting as legal adviser.
"Miller Homes' existing capital structure is bonds, so it is no surprise that the company will continue to be a bond issuer," said a banker with knowledge of the deal. "It is a U.K. company so it will naturally be a sterling-heavy deal."
Investors should expect the bond transaction to launch in February, the same sources said.
According to LCD data, sponsors last year priced a record €50.5 billion of bonds in Europe as fund-to-fund transactions and borrowers with existing bond-focused capital structures dominated the LBO landscape. 2021 was also a record year for sterling issuance.
Bridgepoint in 2017 paid £655 million for Miller Homes when it acquired the company from GSO Capital Partners. The buyout was funded via £250 million of secured fixed-rates notes due 2024 and £175 million of FRNs maturing 2023.
Of these bonds, Miller Homes' £250 million of 5.5% notes due 2024 remain outstanding and are currently trading close to call in a 101/101.5 context, according to Refinitiv quotes, unchanged since the announcement of the Apollo acquisition. The bonds are callable next week at 101.375.
Apollo says it plans to realize Miller Homes' medium-term ambition to build 6,000 new units per year as the U.K. property sector benefits from soaring prices and robust demand for new homes. Miller Homes, which was established in Edinburgh in 1934, currently builds approximately 4,000 homes a year across nine regions, predominately in suburban locations.
Miller Homes is rated B+ by S&P Global Ratings and BB- by Fitch. The company's secured debt is rated BB-/BB+.