Strategic View: UK insurance broker Ardonagh Group refinanced its debt with a $3.3 billion unitranche from a club of 24 direct lenders led by Ares Management, combined with a ~$2 billion bond sale managed by investment banks in February 2024/early 2025. The hybrid structure—the largest unitranche ever arranged—demonstrates convergence between private credit and public markets as sponsors optimize capital structures using both channels .
Full story: Ardonagh’s financing represents a watershed moment in European leveraged finance: the deliberate combination of private credit and public debt in a single transaction, previously considered incompatible due to structural conflicts. The UK insurance broker, backed by private equity firms Carlyle Group, Investcorp, and HPS Investment Partners, structured a two-part refinancing: a $3.3 billion unitranche from 24 direct lenders plus approximately $2 billion in publicly syndicated bonds arranged by investment banks .
The scale proves extraordinary. Ares Management led the direct lending club, which was initially expected to provide over $5 billion before the hybrid structure emerged. The 24-participant club represents one of the largest direct lending syndicates ever assembled for a single transaction, with lenders likely including Apollo, Blackstone Credit, Blue Owl, Golub Capital, ICG, and other large-cap specialists each committing $100-200 million tranches. This distributed participation model enables jumbo deals while managing individual fund concentration limits .
The unitranche structure likely employs bifurcated first-out/last-out mechanics governed by an Agreement Among Lenders, allowing participants to allocate risk according to their return targets. First-out lenders accepting lower returns gain priority in payment waterfalls, while last-out lenders earn premium spreads compensating for subordinated payment ranking. This structural flexibility proved critical for assembling 24 lenders with diverse mandates into unified documentation .
The addition of public bonds alongside private credit raised initial skepticism. Michael Dolce, partner at Madison Dearborn Partners (Ardonagh’s lead sponsor), acknowledged market concerns: “Everyone was skeptical, rightfully so. Why take that risk?” The concern centered on potential conflicts: bondholders and direct lenders have different documentation standards, amendment procedures, and restructuring incentives. However, careful intercreditor agreement structuring resolved these tensions, establishing clear payment priorities and amendment procedures acceptable to both camps .
The rationale for hybrid structuring centers on pricing optimization and market access diversification. While the unitranche commands premium spreads (likely 550-650 bps), the bonds priced inside 500 bps given their senior unsecured positioning and liquid secondary market. By blending both, Ardonagh achieved weighted-average cost of debt below a pure unitranche while maintaining the relationship benefits and covenant flexibility of private credit. The structure also diversified Ardonagh’s lender base from concentrated private credit to broad institutional bondholder participation .
Summary: Ardonagh Group’s $3.3 billion unitranche from 24 direct lenders combined with $2 billion public bonds represents European private credit’s largest-ever club deal and demonstrates private-public market convergence. The hybrid structure, initially met with skepticism, achieves weighted-average cost optimization while diversifying the lender base, suggesting a template for future large-cap financings blending relationship-based direct lending with liquid bond market access .
Source: Axios – Ardonagh Financing, Carrier Management – Ardonagh Loan
