A leveraged buyout of this size will test the banking industry’s capacity to orchestrate and allocate vast amounts of capital on a global scale. It is also a big gamble for lead underwriter JPMorgan Chase & Co, which is putting up US$20 billion of financing — the biggest debt commitment ever by a single lender for a leveraged buyout (LBO). The bank stands to cement its role as market leader if it pays off, or tear a hole in its balance sheet if it goes wrong.
The planned US$55 billion ($71.4 billion) leveraged buyout of video-game maker Electronic Arts Inc. is set to rain money on Wall Street, with banks in line to share roughly US$500 million in fees for arranging the financing.
The deal is being orchestrated by private equity firm Silver Lake Management alongside Saudi Arabia’s Public Investment Fund and Affinity Partners, a firm managed by President Donald Trump’s son-in-law, Jared Kushner. Buyers are clamouring for a piece of the action, eager to put money to work in one of a handful of jumbo buyout deals starting to emerge after a slow period for mergers and acquisitions.
