GIC and PE firm Silver Lake seek to extract $1.25b debt-funded payout from DNA analysis firm

If approved, it would be one of the year’s largest dividend funded by junk debt.

An investor group led by GIC and Silver Lake Management aims to pullout of a $1.25b payout with loan from Ancestry.com, a DNA-analysis and family tree company, in a deal that would be one of the largest payouts funded by junk debt this year, according to a report by Bloomberg.

Silver Lake and GIC acquired a majority stake in Ancestry.com in 2016 in a deal valuing the company at US$2.6b.

Bloomberg data show that Ancestry.com has made about US$1.1b of distributions to equity holders since a Permira-Advisers-LLP-led group took the company private in 2012 as part of an effort to keep investors happy although a number of analysts have sounded caution on the strategy.

“The dividend is a clear step-up in the aggressiveness of the company’s financial policy,” Harold Steiner, an analyst at Moody’s Investors Service, wrote in a note cited by Bloomberg.

Ancestry.com plans to issue a $1.6b seven-year term loan, of which $556.5m in cash will be used to fund recapitalisation, which it plans to use to make a distribution of around US$910m to shareholders and repay US$60m in debt. The company’s owners are also seeking creditor consent to pay an additional one-time dividend of around US$150m at the end of the year and following payout, agreed to use excess cash flow to repay debt.

Read the full report from Bloomberg.