Sources: Uber is seeking $1.25B for its second leveraged loan and has been approaching loan investors directly instead of going through banks
Context & Ripple Effects
Uber's debt strategy has been escalating in scale and independence. It started in 2015 negotiating a $1 billion credit facility with banks, which was quickly upsized to $2B as more banks wanted in. By mid-2016 it had moved into leveraged loans, hiring Morgan Stanley and Barclays to place what became a $1.15B first leveraged loan at roughly a 5% yield.
The new move reported by Bloomberg's Lisa Lee is structural as much as financial: a $1.25B second loan marketed by Uber directly to loan investors, with no bank syndicate in between. That follows an equity raise that valued the company at $62.5B with Tiger Global and T. Rowe Price aboard, meaning Uber is now layering debt on top of a large private valuation while also cutting out the intermediaries it previously paid.
First-order effects
- Uber gains access to another $1.25B of capital without issuing equity, extending the debt path it opened with its first leveraged loan.
- The banks that earned placement fees on the first loan — Morgan Stanley and Barclays among them — lose the syndication mandate this time around.
Second-order effects
- Direct-to-investor distribution pressures bank loan desks on fees and speed, since a borrower with Uber's profile can now reach institutional lenders itself.
- Other late-stage private companies watching this deal get a template for tapping leveraged-loan investors without an underwriting syndicate.
Third-order effects
- If direct issuance proves repeatable, the boundary between venture-stage financing and the institutional credit market thins: large private companies begin behaving like rated borrowers, and banks shift from gatekeepers to optional service providers.
The trend: Late-stage private companies are moving from bank-intermediated credit toward direct borrowing from institutional loan investors.