Battle for DocuSign comes as rates in flux

Private credit duels with banks for $8B LBO debt for company

Direct lenders are vying with banks to finance a potential buyout of San Francisco-based DocuSign with a debt package totaling as much as $8 billion, according to people with knowledge of the matter.

Bain Capital and Hellman & Friedman are jockeying to acquire the electronic signature platform, though the discussions are ongoing and details may change, according to the people, who asked not to be named discussing a private transaction.

Representatives for DocuSign, Bain and Hellman & Friedman declined to comment. Details about the potential take-private were reported earlier by Reuters.

The proposed loan would be the largest ever direct-lending deal by roughly $3 billion, according to data compiled by Bloomberg, and comes at a time when the competition between banks and direct lenders is reaching a fever pitch.

Conditions in the broadly-syndicated loan and junk-bond markets — where private equity firms have traditionally looked to finance multi billion-dollar buyouts — have improved in recent months, in part due to mounting speculation the Federal Reserve's aggressive interest-rate hiking cycle is over. That could make a debt package arranged by banks more attractive compared to private credit and increase the rivalry between the two sets of lenders.

The revival means more competition in the $1.6 trillion private credit market, which boomed over the past 18 months as soaring rates and hung debt made banks cautious about underwriting fresh leveraged buyouts.

DocuSign has a market capitalization of nearly $13 billion and went public in 2018.