PAI and Nestlé to receive €4.4bn payout as Froneri prices landmark debt deal
Froneri International, the UK-based ice cream group co-owned by PAI Partners and Nestlé, is close to securing a €3.9bn debt package to finance a €4.4bn shareholder payout.
The transaction comes as PAI prepares to roll its 50% stake in Froneri into a continuation vehicle, allowing the firm to extend its hold on the business amid limited exit opportunities.
The move reflects a broader private equity trend of using recapitalisations and secondaries to return capital to investors during a sluggish M&A environment.
The €4.4bn payout will be financed through €2.8bn in syndicated loans and €1.1bn in bonds, alongside €540m in balance sheet cash. According to market sources, the loans and bonds are expected to price at tighter spreads than initially guided, with yields of 4.75% for the euro bond tranche and 6.125% for the US dollar portion.
Barclays and UBS are leading the financing process. Moody’s downgraded Froneri’s credit rating by one notch in response to the increased leverage, citing the use of the €3.9bn debt for an “extraordinary dividend.”
PAI originally acquired R&R Ice Cream in 2013 and created Froneri in 2016 by combining it with parts of Nestlé’s global ice cream operations. The company now owns iconic brands including Häagen-Dazs.
The deal places Froneri among the year’s largest leveraged recapitalisations, alongside Clarios International’s $4.5bn distribution earlier this year. It also highlights sustained demand for private equity-backed issuers in both the leveraged loan and high-yield bond markets, with June marking the busiest issuance month for US high yield since 2021.
Representatives for PAI, Nestlé, Froneri, Barclays, and UBS declined to comment.