Private Equity’s New Way to Defer M&A Debt Costs

 

• Buyout firms seek ability to delay all interest expense
• KKR asks private credit to allow payment-in-kind for Cotiviti

Private equity giants are turning to a new take on an old solution to higher debt costs for M&A deals: borrow all of the money they can and defer paying it back.

KKR & Co. is asking private credit funds for a so-called payment-in-kind feature that would allow it to push off all cash interest payments if and when it purchases a 50% stake in health care analytics company Cotiviti Inc. The company is looking for $5 billion to $6 billion of debt for the deal.

https://www.bloomberg.com/news/articles/2023-12-16/private-equity-s-solution-to-higher-debt-costs-is-to-borrow-and-defer-payments