(Bloomberg) — Wall Street banks including JPMorgan Chase & Co. and Bank of America Corp. are in talks to provide up to $8 billion in financing to acquire DocuSign Inc., which would value the company at about $13 billion. According to people familiar with the matter.
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Jefferies Financial Group Inc. and Deutsche Bank AG are also considering financing the largest leveraged buyout so far this year, according to people familiar with the matter who asked not to be named.
Private equity firms Bain Capital and Herman Friedman are vying to acquire the e-signature platform, but discussions are ongoing and could change, the people added. Direct lenders have also been looking for ways to support acquisitions, Bloomberg previously reported.
Representatives for JPMorgan Chase, Bank of America, DocuSign, Jefferies, Deutsche Bank, Bain & Company and Hellman & Friedman all declined to comment.
Both financing avenues would require preferred stock to complete the deal, given the purchase price and expected acquisition leverage, people familiar with the matter said. The amount of debt a bank can offer is typically lower than a direct lender, so the preferred equity amount will be higher if they win.
Read more: Private Credit battles banks for $8 billion in DocuSign LBO debt
Some of the largest lenders in the $1.7 trillion private credit market are hesitant to participate, people familiar with the matter said. If provided by a direct lender, the financing would be one of the largest private loans ever, according to data compiled by Bloomberg.
DocuSign faces a sharp increase in leverage due to the potential acquisition, as the company has not had more than $1 billion in debt since going public in 2018, according to data compiled by Bloomberg. For private lenders, the potential rise in leverage increases that risk — especially as DocuSign competes for users with less leveraged companies like AdAdobe Inc.
Direct lenders have also been competing against the broad syndicated loan and junk bond markets, which have come back to life. This allows banks to offer more attractive pricing than private credit companies.
Competition between banks and direct lenders has also reached fever pitch in other deals. KKR & Co. has been leaning toward bank financing options for its potential acquisition of Cotiviti Inc. The investment bank is also ahead of its private credit rivals in acquiring Cotiviti Inc., offering a 3 billion euro ($3.25 billion) debt package to support a potential acquisition of Techem GmbH.
–With assistance from Paula Seligson and Lisa Lee.
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