Managing Purchase Price Exposure

Thyssenkrupp Elevator
The consortium of Advent and Cinven engaged PMC Treasury to manage the foreign exchange exposure related to the EUR purchase price financed through USD debt in the largest European PE transaction for a decade (EUR 17.2bn)

Challenges

• Transaction size was significant enough to impact markets
• Constrained risk capacity of the banks given Covid crisis
• Funding process included nearly 80 individual payments in different currencies
• Complexity of the funding structure impacted optimal hedge entity

Solutions

• Managed information flow to banks to eliminate any market disruption
• Negotiated funding back up facility of EUR 1.8bn from hedge bank
• Drove structuring solution to minimise tax impact and optimise hedge counterparty
• Negotiated bank contingent and execution charges to drive significant client savings
• Ensured identical documentation in complex structure executed across different banks to align funding

Benefits