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Investors ready for up to US$2.5bn in debt for Blackstone's Ancestry.com buy

Aaron Weinman
·3 mins read

By Aaron Weinman

NEW YORK, Aug 10 (LPC) - The Blackstone Group's acquisition of human genealogy provider Ancestry.com is expected to be backed with up to US$2.5bn of new debt financing, according to two sources familiar with the sale.

The potential transaction will be a welcome boost for investors looking to participate in new, event-driven credit facilities that remain limited since the Covid-19 pandemic slowed fresh merger and acquisition activity.

Bank of America and Credit Suisse have provided committed financing for the acquisition, which was announced last week. The banks are expected to raise the debt to support the buyout in the high-yield bond and institutional leveraged loan markets, the sources said.

Blackstone announced on August 5 that it agreed to acquire Ancestry from investors Silver Lake, Spectrum Equity and Permira for US$4.7bn, with Singaporean sovereign wealth fund GIC remaining a minority investor in the company.

The private equity firm will come in with at least US$2bn in equity, while GIC will inject up to US$500m, the sources said.

Spokespersons for Bank of America and Credit Suisse declined to comment. A spokesperson for Blackstone referred questions to its press release and spokespersons for Ancestry and GIC were not immediately available for comment.

Blackstone’s bet on Ancestry ultimately rests on people’s curiosity in digging deeper into their family history and ramping up the company’s subscription base during a global pandemic.

Moody’s Investors Service expects demand for Ancestry’s products to spike as consumers unearth new interests, while Covid-19 forces people to stay home, according to an April 6 report.

Investors too, are confident Ancestry will succeed throughout the economic slowdown on the back of its predictable, subscription-based cash flows and strong liquidity, one investor said.

“Accounts are very comfortable with a credit like Ancestry,” said the investor. “It’s a good company that the market knows well so a new financing will go nicely under these market conditions.”


Ancestry’s total revenue declined 1.2% in 2019 partly due to a 48% dip in DNA unit sales compared to 2018, Moody’s said in its report.

Yet, the company enjoys strong market share and cash flow, enabling it to sustain high leverage. Its adjusted debt to earnings before interest, tax, depreciation and amortization ratio was 6.7 times at the end of 2019, according to Moody's.

Since investing in the company in 2016, Ancestry's current owners have been able to complete at least two transactions in the leveraged loan market to support dividend payouts.

In August last year, Ancestry paid more than US$300m to shareholders from a US$1.4bn loan, Refinitiv LPC reported at the time. In October 2016, the company raised US$1.9bn in loans that partially supported a dividend.

Silver Lake and GIC completed their purchase of Ancestry for US$2.6bn in May 2016. Permira and Spectrum were existing investors at the time.

Ancestry’s existing term loan, due in 2026, was quoted at 99.75 to 100.25 cents on the dollar on August 6, according to a second investor, after Blackstone announced that it agreed to buy the company in a press release on August 5. (Reporting by Aaron Weinman. Editing by Michelle Sierra and Claire Ruckin.)