For Citigroup and Apollo, it would mark their first private staple financing, one of the people said, in which the US investment bank leverages its merger and acquisition advisory capabilities for Boeing, with cash from the private equity firm. Private staple is a form of pre-agreed funding used to support an acquisition.
The development comes as Wall Street banks dedicate more of their balance sheets to private credit in a bid to compete with direct lenders in the leveraged-finance business. These tussles are particularly fierce in debt-fuelled takeovers, where both private credit and Wall Street banks are grappling with a slowdown in M&A activity.
For Boeing, the sale of Jeppesen could fetch the aircraft manufacturer approximately $7bn, said the people, who were not authorised to speak publicly. They estimated the debt financing to be between $3bn and $3.5bn.
There is no guarantee that the bidders who accept that financing would win the deal, and buyers may choose to use other lenders instead. Discussions are ongoing and terms of the deal and financing could still change, the people added.
Both corporate and private equity buyers interested in acquiring Jeppesen are being offered the private debt option, the people said. This would be a major test of the Citi-Apollo partnership, announced last September, and its ability to win over a buyer with a supporting financing package.
Spokespeople for Citigroup and Apollo declined to comment, while a representative for Boeing said the company “does not comment on market rumours or speculation.”
Under their arrangement, Citigroup and Apollo agreed to work together on $25bn worth of deals over five years. Citigroup will source new financing opportunities from its clients and pocket a fee for originating any transaction, while Apollo will provide the cash.
However, the carve out of Jeppesen is a rare instance of a leveraged buyout in today’s market. Such deals have been few and far between to start the year, due to uncertainty about regulatory policies under President Donald Trump and the direction of the US economy.
Unlike other potential transactions hampered by those macro concerns, Jeppesen is one of the non-core assets Boeing is considering shedding to lighten its $58bn debt load and recover from a series of missteps. The deal has entered its second round of bids, the people familiar said. Companies including RTX Corp and Honeywell International Inc have evaluated Jeppesen, while buyout firms such as Carlyle Group Inc, Thoma Bravo and Warburg Pincus, among others, have shown interest in the business, Bloomberg News reported in January.
Prospective bidders have not ruled out other funding sources to support a Jeppesen buy, including committed financings from Wall Street banks as well as loans from other private credit firms, the people said.
In recent years, banks have lost business to cash-flush private credit players, which tout their ability to complete transactions faster than their counterparts in the syndicated-loan market, and offer flexible structures like payment-in-kind options.
To compete, big banks have struck direct lending partnerships similar to Citigroup and Apollo’s agreement. Last month, JPMorgan Chase & Co set aside $50bn to expand direct lending, while Wells Fargo & Co joined with Centerbridge Partners on a $5bn direct-lending fund in 2023.
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