HPS Specialty Loan Fund VI
Scale Matters: Growth of Megatranche Loans in Direct Lending
> Speed and certainty of execution can be just as compelling as pricing and leverage
> Provides control over the lender group and an alternative financing solution to borrowers who are ratings sensitive
› Companies seeking megatranche loans are larger/more defensible than standard mid-market LBO candidates, but
often have nearly identical loan pricing
Over 47% of the megatranche loans priced since 2021 were at or greater than $2bn¹, meaningfully raising the
ceiling on the size of financings that the private markets can get done
Recent Reported Statistics¹:
$157bn
of unitranche loans sized
$1bn+ since 2019
$145bn
or 93% surfaced since 2021
Of the 70 megatranches since
2021, nearly
47%
were at or greater than
$2bn+
Direct Lending Transactions 2019-2022¹:
$ in billions
$160
$140
$120
$100
$80
$60
$40
$20
$0
>= $2bn
>= $1bn
>= $500mm
>= $300mm
>=$300mm
■>=$500mm
>= $1bn
■>= $2bn
$8 $8
2019
0
2
8
$3
8
$0
$19 $16
2020
1
6
17
$9
25
$2
$51
$45
$35
2021
8
19
33
49
$20
$137
¹ Source: DLD (Direct Lending Deals), as of January 4, 2023. Represents HPS's subjective opinions and views as of the date hereof and is subject to change depending on market environment.
$125
$110
2022
HPS
25
51
73
103
$75
11View entire presentation