Risk reward

摘要

Prospects are brightening for struggling Swiss vending machine business selecta after it received a €220m PIK loan from KKR. The deal is the latest investment from the private equity firm's US$3.8bn special situations fund and boosts its portfolio of high-risk and high-reward assets. KKR's PIK loan is a deeply subordinated equity-like instrument. At nearly half of the value of Selecta's business, the PIK will allow KKR to make substantial gains, particularly if the company is sold in three to five years. Although the PIK loan comes at a high price for Selecta's owner, Allianz Capital Partners, which is paying around 18%, it helps Selecta to avoid a debt restructuring and ACP to keep a stake in the company. KKR's investment in Selecta follows a similar €350m quasi-equity PIK loan for Swedish mattress maker hilding anders last September.