Debt Financing

Merodis can help larger small-caps and smaller mid-caps raise debt financing away from the traditional bank lending channel in a very cost efficient way via private placements. This market is growing at a rapid pace as disintermediation takes hold in Europe following the financial crisis in 2008. At Merodis, we can assist you in the preliminary soft sounding of investors, drafting of the teaser and information memorandum, organization of roadshows, pricing of the transaction, and drafting and negotiation of the ad-hoc documentation and final placement of the deal.

Since the financial crisis, Europe’s over-reliance on bank funding has diminished as disintermediation takes hold. In fact, the market size is now well over €40bio. Private placements allow corporates to diversify their funding sources, as we saw the dangers of liquidity drying up during the financial crisis. Private placements thus occupy a sweet spot between benchmark corporate bonds and bank financing. Documentation has become more lean, flexible and standardized. Pricing is competitive and maturities are typically longer then for more traditional bank lending. It allows for a diversified and stable funding mix, and is an important first step towards capital markets as well as being a great marketing tool that expands the company’s investor base beyond their traditional core banks. Important in this aspect is the company extending its funding base to an investor which is not looking for side business and only focused on providing financing. During the last few years, the Belgian market has become more active with several transaction printing per year as companies discover the advantages of private placements.

Merodis can be your independent and unbiased advisor for this type of financing transaction:

  • Assist in understanding the ins and outs of the private placement market with regular market updates and insights (potential investor interest, regulation, pricing, maturities, sizes, covenants…);
  • Identify potential investors and manage the dialogue and flow of information between the borrower and investors;
  • Market the transaction by preparing a market soft sounding via the organization of roadshows (one to one’s with investors) and drafting of a teaser and an information memorandum;
  • Drafting of the subscription agreement and assisting in the negotiation of the key terms and conditions of the transactions (drafting of the Final Term Sheet including the financial terms of the deal);
  • Facilitating closing and settlement of the transaction; and
  • Follow-up of the transaction: a private placement is a long-term solution for funding.