Hellman & Friedman, Valeas consider $1bn Baker Tilly dividend recap

Hellman & Friedman and Valeas Capital Partners are exploring a potential dividend recapitalisation that could return as much as $1bn to the private equity owners of accounting and advisory firm Baker Tilly, according to a report by Bloomberg citing unnamed people familiar with the matter.

The sponsors are considering raising new leveraged loans as part of a broader refinancing that would replace the company’s existing private credit borrowings, with a portion of the proceeds potentially used to fund the shareholder distribution.

Deutsche Bank is leading the refinancing process and has been speaking with investors this week, the people said. The size of any dividend remains under discussion and could change.

If completed at the proposed size, the transaction would be the largest dividend recapitalisation announced so far this year, according to Bloomberg-compiled data.

Baker Tilly’s principals also hold an equity stake in the business and would receive part of any distribution, one of the people said.

Representatives for Deutsche Bank, Hellman & Friedman, Valeas Capital Partners and Baker Tilly declined to comment.

The potential transaction comes as private equity firms increasingly turn to debt markets to generate liquidity from portfolio companies, amid a relatively subdued exit environment. More than $6bn of transactions involving a dividend component have been completed so far this year by sponsors including Warburg Pincus and Brookfield Infrastructure Partners, according to Bloomberg data.

In June alone, at least 10 borrowers raised more than $3.5bn through loans and high-yield bonds to finance distributions to owners.

For Baker Tilly, the proposed refinancing and dividend would represent its first transaction of this type in the leveraged loan market since Hellman & Friedman and Valeas agreed to acquire the company in February 2024.

The business currently has approximately $2.5bn of debt provided by direct lenders, including Blackstone, which the sponsors are seeking to refinance as part of the proposed transaction.