“$2 Billion is the New $1 Billion”: Unitranche Revisited (First of a Series)

In October 2015 we published a series of articles on the unitranche, what we called “one of the most innovative, and increasingly popular, financing tools in the middle market.” Those commentaries were consolidated into a white paper: “The Unitranche – What it is, and Why it Matters.”.

In that white paper we covered the history of the unitranche, including its origins in 2007 with a $3.6 billion fund managed by Allied Capital (later acquired by Ares) and Antares Capital.

We also detailed the unitranche structure which, back then, was often bifurcated between first-out and last-out slices. Each of these components was provided by different parties and governed by an Agreement Among Lenders (AAL). In the event, that structure became too clunky for private equity sponsors to manage, and credit providers morphed to a truly single first-out tranche.

In 2016, soon after our special series, Ares reached a milestone by leading, for Thoma Bravo’s Qlik Technologies, the first $1 billion unitranche. Subsequently, other mega-tranches came to market as issuers at the larger end of the market recognized the value of the one-stop.