CAA to perform $393m employee share buyback

Creative Artists Agency is believed to be raising money to buy equity back from employees, in a move that would bring similar benefits to an IPO

By Anna Grace on 14 Nov 2019

CAA to perform employee equity buyback instead of IPO

CAA headquarters in Los Angeles

image © Minnaert

Amid a backdrop of postponed initial public offerings, Creative Artists Agency (CAA) is reportedly looking to repurchase employees’ equity, as an alternative method of improving liquidity.

As first detailed in the Hollywood Reporter, LA-based talent agency CAA is in the process of raising US$393 million in order to buy stakes held by its agents and executives.

It is believed that the agency is looking to borrow $1.15 billion in a seven-year loan to refinance at a more favourable interest rate of $757. The remaining $393m would be used to fund the buyback of shares from a number of employees.

Many of the stakeholders, who make up only a select group of senior employees, are understood to have bought shares when private equity fund TPG became majority owner in 2014.

The deal would allow CAA to cash out equity while avoiding an IPO. Endeavor, the parent company of fellow talent agency WME, recently put plans for its own IPO on hold, after receiving a lukewarm reception from investors.

Other companies recently attempting IPOs have met similar fates. Office rental company WeWork halted plans following concerns from investors, whereas shares of static exercise bike business Peloton plummeted 11% upon close of its first day of public trading.

Arrangers of the CAA deal include current majority stakeholder TPG, along with Bank of America, Credit Suisse and UBS.

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