Blackstone and EQT are considering raising up to EUR 2.5bn of debt from private credit funds to finance the takeover of Spanish waste company Urbaser.

The consortium of infrastructure investors is in bilateral negotiations to buy Urbaser from Platinum Equity for an enterprise value of around EUR 5.5bn, and is seeking to firm up its financing before a deal is agreed.

Blackstone’s own credit arm has offered to provide a large chunk of the debt, and more than a dozen other private debt investors have been approached to join the deal, according to sources familiar with the situation.

Infrastructure debt funds and other generalist private credit funds are considering participating, including Ares Management, Apollo-backed Apterra Infrastructure Capital and HPS Investment Partners, a firm that is being acquired by BlackRock, according to one of the sources.

Private credit arms of Singapore’s GIC and Canada’s CDPQ and PSP Investments are also among debt investors approached, the source said.

Blackstone’s private credit unit could take up to 40% of the debt package under negotiation, this source added, potentially putting Blackstone in the unusual position of being both an equity and debt investor in the deal.

Bank loan pricing rising

Blackstone and EQT initially lined up a debt package of about EUR 3bn with a group of banks led by Santander and Citi, including EUR 2.5bn of term loans and other ancillary facilities, but are now testing other financing options, according to the sources.

This is driven by uncertainty in the debt markets following the trade war spurred by US President Donald Trump’s tariff announcements last month, one source said.

“The underwriters have asked for a wide flex,” said the source, referring to the ability to adjust pricing upwards if the deal struggles to gain enough traction in syndication. “The private credit option may be more expensive than the bank loan but offers more certainty.”

Santander and Citi also acted as Platinum’s advisors on the sale of Urbaser and put together a staple financing proposal during the auction, but terms have worsened since then, the source added.

While a bank loan option is still on the table, Blackstone and EQT are also considering raising the entire EUR 2.5bn term debt from private credit funds, or splitting the debt between banks and debt funds, sources said.

Urbaser is currently financed with an EUR 1.25bn leveraged loan, plus an EUR 400m revolving credit facility, which would have to be refinanced in the event of a sale.

The team of Blackstone and EQT is the only remaining suitor for Urbaser, after several rivals exited the auction during the previous stages.

The two investors submitted separate non-binding offers last November and were shortlisted for the final round. EQT briefly dropped out of the process in February, Infralogic reported at the time, before teaming up with Blackstone to re-enter the race.

The team submitted an offer in late February, at the end of the second round, and was granted a period of exclusivity until late April to finalise a deal. Negotiations are still ongoing as the parties work on the financing, with one source expecting an agreement by June.

Platinum also received another final offer from Abu Dhabi sovereign wealth fund ADQ for a 30% stake in Urbaser, but preferred a full disposal.

Japanese conglomerate Itochu also made it to the second round but dropped out without placing a binding bid, while other first-round offers came from KKR Infrastructure, I Squared and Macquarie Asset Management.

Platinum’s exit strategy

If successful, the deal would allow Platinum to sell Urbaser, which operates waste collection, management and treatment services in 15 countries including Spain, for a multiple of around 10x its latest EBITDA.

Platinum bought Urbaser in 2021 from Chinese environmental services group China Tianying for an enterprise value of EUR 3.5bn.

The private equity firm has already sold Urbaser’s UK unit to FCC and its Nordics operations to Cube Infrastructure Managers, and offloaded its water management arm Socamex to Quaero Capital.

Blackstone, EQT, HPS, Ares, GIC and PSP declined to comment. Apterra, CDPQ, Santander, Citi and Platinum did not respond to a request for comment.