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Blackstone Backs AI-Resistant Services with $1B Loan
5 Mar
Summary
- Blackstone financed Champions Group acquisition with over $1 billion in private credit.
- The loan, priced at 4.5% over benchmark, shows tight private credit market conditions.
- Champions Group's services face low AI disruption risk, appealing to investors.
Blackstone Inc. has financed its acquisition of Champions Group, a provider of residential services, through a substantial private credit loan totaling more than $1 billion.
This strategic move underscores a broader market trend where investment firms and lenders are prioritizing sectors perceived as less susceptible to disruption by artificial intelligence.
The acquisition, agreed upon in February, values the Orange County, California-based company at roughly $2.5 billion. Champions Group specializes in essential services like furnace repair and air conditioning maintenance, industries considered to have a low risk of being automated or rendered obsolete by AI advancements.
The private credit loan, which includes a delayed-draw term loan, was priced at a spread of 4.5 percentage points over the benchmark rate. This rate is noted as one of the tightest offerings the private credit market has recently provided, indicating strong investor confidence.
This financing structure will bring Champions Group's leverage ratio to 6.5 times its earnings. The co-president of Apollo's asset management arm, John Zito, has suggested that challenging conditions in private credit may persist into next year, though he downplayed concerns about fund withdrawals.
