Primary Preview: First Eagle $2B Leveraged Loan to Back Buyout by Genstar Capital Receives Enthusiastic Feedback From Buy-Siders; Octus Portfolio Analytics Data Shows First Eagle, Napier Park CLOs Outperform for Revenue Growth

Market participants considering a $2 billion loan financing Genstar Capital’s buyout of New York-based investment firm First Eagle are optimistic about the deal considering its long premarketing period and a large number of existing lenders rolling over, according to sources.

Price talk on the Morgan Stanley-led first lien seven-year term loan B is at SOFR+325 bps-350 bps and 98.5-99 OID with commitments due June 10. A $450 million revolving credit facility and $350 million delayed-draw term loan are also included in the financing. Proceeds will be used to support Genstar’s majority stake in First Eagle from Blackstone and Corsair Capital, which was announced in March and expected to close in the second half of 2025.

Several leveraged finance investors looking at the deal for First Eagle said they expect it to do well considering the extensive premarketing process earlier this year by lead arranger Morgan Stanley. The deal is likely to be accelerated, sources noted, on account of pent-up demand in the current primary market and First Eagle’s strong rating as a double-B credit.

Most of the asset management firm’s existing lender group is expected to reinvest in the new offering, which should drive success of the deal, one existing lender said. The lender noted it will be tougher for new buy-side participants to get involved because a large number of existing lenders have already committed to the new facilities. Additionally, the investor noted that the price talk of SOFR+325 bps-350 bps on First Eagle’s loan looks attractive considering its high Ba3/BB-/BB- corporate ratings.

Another positive factor supporting First Eagle’s transaction is First Eagle’s Global Fund, according to the lender, who noted that the fund is countercyclical and outperforms when markets are down. The fund is First Eagle’s largest driver, the investor added. Year to date, the fund’s performance is up about 10.91%, according to its website.

Morgan Stanley began premarketing the $2 billion loan in March, with indicative price talk at SOFR+300 bps, Octus, formerly Reorg, reported. Investors noted in March that the bank had been “aggressive” in its premarketing efforts, as reported.

One leveraged finance banker noted last week that First Eagle’s deal has been moving quickly, a tribute to the premarketing work that was done, while also noting the market has become more comfortable with adding more leverage to deals.

“It’s an interesting scenario here that [First Eagle’s] CLO business is almost too visible for everyone they’re trying to sell the business to,” said the banker on the market’s consideration of First Eagle’s CLO arm.

First Eagle and Napier Park’s CLO performance relative to its peers is strong, according to Octus’ Portfolio Analytics data. Both CLOs outperform the market average for revenue growth and feature lower first lien and net leverage than the market average.
 

First Eagle’s CLO performance was a draw for many investors, many of whom are investing in First Eagle’s loans via other CLOs. “If it was all CLOs, I might’ve been able to get there,” one investor noted. The investor ultimately passed because of market risk and the need for continued strong performance relative to peers.

First Eagle’s CLO business has a strong track record with solid growth, another loan investor said. The investor added that while in the past it was difficult to measure CLO performance, it is easier to analyze CLO portfolios and understand what managers are doing well or not, which has made CLO performance more accessible.

Octus previously reported that early views on First Eagle’s deal were mixed. One source noted that leverage, at 4.5x to 5x on LTM EBITDA excluding the delayed-draw facility, was a bit too high, while another praised the private equity buyer Genstar’s strong reputation in the market.

The pro forma leverage implied by the transaction remains a point of concern for some investors. Genstar plans to grow First Eagle into its new capital structure by expanding its distribution channel, partially through acquisitions, according to sources. Genstar also relayed to potential lenders that it did not plan to take out dividends in First Eagle, sources added.

Participants also diverged on First Eagle’s inflows. In particular, inflows for retail, wealth and in the public markets have been very strong, one participant noted, while another said AUM growth was mostly a function of market performance rather than strong inflows.

First Eagle has about $152 billion in assets under management as of March 31, 2025, according to its website. First Eagle’s offerings include equity, fixed income, alternative credit and multi-asset strategies.

Blackstone and Corsair made a majority investment in First Eagle in 2015 in a transaction that gave First Eagle a total enterprise value of about $4 billion. The deal marked an exit by TA Associates. Under Blackstone and Corsair’s ownership, First Eagle bought alternative credit managers THL Credit Advisors LLC in a deal that closed in 2020 and Napier Park Global Capital in 2022.

On May 27, S&P Global Ratings revised its outlook on First Eagle to negative from stable and affirmed its BB- issuer credit and secured debt ratings. The ratings agency said its negative outlook reflects its “expectation that FEH’s weighted average leverage will remain near the 5.0x downside threshold in the next 12 months, and that its investment performance, assets under management, and earnings won’t deteriorate.”

Fitch Ratings assigned First Eagle a BB- long-term issuer rating as well as a BB- to the existing debt and a stable outlook, citing First Eagle’s “long-tenured franchise as an investment manager (IM), solid investment performance within its public market funds, experienced management team, and above average fee-based EBITDA.”

Simpson Thacher and Davis Polk are acting as legal counsel to First Eagle, and Morgan Stanley is acting as lead financial advisor; BofA Securities, UBS and Jefferies are also acting as financial advisors to First Eagle. Willkie Farr & Gallagher LLP is acting as legal counsel and Moelis & Co. LLC as lead financial advisor to Genstar, with Goldman Sachs, Barclays and BMO also providing financial advisory support.

A list of First Eagle’s CLO holders can be found in Octus’ CLO Database HERE. First Eagle’s existing first lien SOFR+250 bps term loan facility due in 2027 was last indicated at par, according to Solve.

Octus’ Americas Covenants team assigned First Eagle’s debt financing a 3.04 on a 1-5 scale for lender protections, with 5 being the least protective for lenders and 1 being the most protective.

Genstar declined to comment. Morgan Stanley and First Eagle did not respond when reached for comment.