Double the security

Double dip financings are the latest tool for distressed situations

Happy Friday. Here’s what we’ve got today…

  • A look at the emergence of double dip financings

  • The deal sheet, plus OpenAI’s uniquely structured venture fund


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Sponsor-backed companies have a standard playbook of liability management exercises when faced with liquidity concerns or upcoming debt maturities. Typical moves include an uptier, in which the sponsor creates a new tranche of secured debt that’s senior to existing lenders, or a drop down, wherein assets are transferred out of the collateral package entirely.

In recent months, a new tool has picked up steam as a viable alternative: the double dip financing.

Creative Structuring

In a double dip, a creditor provides additional debt financing to the borrower that is secured by two dollars in claims for every dollar lent—doubling up the creditor’s protection against a downside scenario.

With this structure, the borrowing company forms a new subsidiary that borrows the money, guaranteeing the loan with the company’s other operating subsidiaries, while simultaneously lending the loan proceeds from the newly formed subsidiary to the operating subsidiaries—pledging this loan as collateral to the original lender. This maneuver provides the lender with two separate secured claims against the borrower’s assets: the initial loan it made (the 1st dip), and the inter-company loan (the 2nd dip).

If all goes well, the borrower pays back the original principal as it normally would. But, if the situation takes a turn for the worse, the double dip lender will be better positioned in a restructuring than it otherwise would be. While the lender would never recover more than the amount owed on the loan, its outlook in a below-par recovery is more favorable (relative to other lenders who have only a single claim).

What’s the Point?

On the surface, it can seem like added complexity for little upside—you’re still borrowing and repaying the same amount. In practice, however, the double dip structure provides a level of added security for lenders that allows a company to take out new financing when it otherwise couldn’t have (due to its risk profile). A double dip financing can also lower the cost of capital for borrowers.

The other advantage of the double dip’s emergence is that it provides an option for companies that can’t execute either an uptier or a drop down. With both moves now more common, many credit agreements have incorporated protections that prevent such strategies.

That said, there are risks involved with a double dip. The end result is still unfavorable for existing creditors, which opens up a greater possibility of litigation. They also bring added complexity to the capital structure, and could reduce the likelihood of a successful out-of-court restructuring, should things get to that point.

Double dips could also invite scrutiny in a bankruptcy process, though, for lenders, it’s probably still better to have both a strong claim (1st dip) and a questionable claim (2nd dip) than only the one. 


KKR agreed to acquire a close to 50 percent stake in healthcare analytics provider Cotiviti from Veritas Capital for around $10.5 billion, per Axios.

General Atlantic and Stone Peak Capital agreed to acquire the 25 percent stake they don't already own in HireRight, a provider of background screening and employee onboarding solutions, at a $1.65 billion valuation.

Barclays is considering an approach for Societe Generale's U.K. private bank, per Reuters.

Seidler Equity Partners is preparing to sell a minority stake in Quick Quack Car Wash, which could be worth more than $3 billion, per Reuters.

RedBird IMI agreed to acquire All3Media, an independent television, film, and digital production studio, for £1.15 billion.

DraftKings (Nasdaq: DKNG) agreed to acquire Jackpocket, a mobile lottery app, for $750 million.

Swisscom is the only remaining party in Vodafone Italy’s sale process.

Nautic Partners acquired Angels of Care, a home health provider, from Varsity Healthcare Partners.

Capstreet acquired Analytic Stress Relieving, a provider of metal heat treating services.

Gabon's state-owned oil company agreed to acquire Assala Energy, a local oil and gas company backed by Carlyle.

Clarion Capital Partners acquired Narrative Strategies, a public affairs and corporate reputation agency.

Petauri, an Oak Hill Capital portfolio company, acquired Force Communications, a medical communications business.

Walter Capital Partners acquired Charcoal Group, a Canadian restaurant chain operator.

Performance Systems Integration, backed by The Riverside Company, has acquired Fire Safety Pros, a provider of specialized fire protection services.

Uncommon Brands, backed by Crux Capital, acquired Fuego Tortilla Grill, a Mexican restaurant chain.

Tuckahoe Holdings acquired Gateway Dealer Network, an automotive distributor, from Brightstar Capital Partners.


Naver hired Goldman Sachs and Morgan Stanley to advise on a US IPO for Webtoon, its online comics business that could be valued at up to $4 billion, per Bloomberg.

Tata Group is evaluating a spinoff of Agratas, its battery business, which could be worth more than $5 billion, per Bloomberg.

Neo4j, provider of a graph database management system backed by Eurazeo and Inovia Capital, among others, is an IPO on Nasdaq, per Bloomberg.

Roark Capital is considering an IPO for Inspire Brands, its holding company for restaurant chains Arby's, Buffalo Wild Wings, Sonic, Jimmy John's, and Dunkin' Donuts, per Bloomberg.


Tech, Vertical SaaS, & Misc. Enterprise

Lambda, a provider of cloud and AI infrastructure products, raised $320 million in Series C funding. US Innovative Technology led, with participation from B Capital, SK Telecom, T. Rowe Price, Crescent Cove, Mercato Partners, 1517 Fund, Bloomberg Beta, and Gradient Ventures.

Higharc, a provider of cloud-based home-building software, raised $53 million in Series B funding. Spark Capital and Pillar VC co-led, with participation from SE Ventures, Fifth Wall, Standard Investments, Home Depot, and Ferguson.

Rasa, a developer of conversational AI solutions, raised $30 million in Series C funding co-led by StepStone and PayPal Ventures, with participation from Andreessen Horowitz, Accel, and Basis Set.

Scribe, a developer of automated business process capture and documentation software, raised $25 million in Series B funding led by Redpoint. New York Life Ventures, Amplify Partners, Tiger Global, and XYZ Ventures also participated.

Alembic, a provider of marketing attribution software, raised $14 million in Series A funding. WndrCo led, with participation from MXV Capital and Liquid 2 Ventures.

Fever, a Swedish developer of power technology solutions, raised €10 million in seed funding from General Catalyst, La Famiglia, and Norrsken VC., a provider of a developer-oriented access control platform, raised $8 million in Series A funding led by Scale Venture Partners, with participation from NFX, Verissimo Ventures, Roosh Ventures, Firestreak, 92712, Cervin Ventures, Honeycomb, and Blumberg Capital.

Guardrails AI, a producer of AI governance solutions, raised $7.5 million in seed funding led by Zetta Venture Partners, with participation from Factory, Pear VC, Bloomberg Beta, and GitHub Fund.


Duetti, a NYC-based music financing platform, raised $90 million in new funding. Nyca Partners led the $15 million equity round, with a $75 million credit facility provided by Northleaf Capital Partners.

Architect Financial Technologies, a developer of trading infrastructure for institutional investment platforms, raised $12 million in seed funding. BlockTower and Tioga Capital co-led, with participation from CMT Digital, ParaFi Capital, A Capital, and Twelve Below.

Fordefi, a developer of non-custodial wallet infrastructure, raised $10 million in a seed extension from Electric Capital, Paxos, and Alchemy.

Media & Consumer

Bending Spoons, a Milan-based mobile app developer, raised $155 million in a round led by Durable Capital Partners.

Explurger, a travel-focused social media and lifestyle app, raised $4.5 million in Series A funding from Affle (India) Limited.

Healthcare & Life Sciences

Firefly Bio, a developer of degrader antibody conjugates, raised $94 million in Series A funding from Versant Ventures, MPM BioImpact, Decheng Capital, and Eli Lilly.

Industrials, Greentech, & Other

Revel, an electric vehicle charging and rideshare company, is seeking $200 million of new equity funding, per Bloomberg.

Orienspace, a Chinese commercial satellite launch company, raised $84 million in new funding. The round was co-led by Shanhang Capital, Shenyin & Wanguo Investment, and Hongtai Aplus, with participation from CMBC International, Xin Ding Capital, and the Liangxi Science and Technology Innovation Fund of Funds.

Skylo, a satellite communications network provider, raised $37 million in new funding. Intel Capital and Innovation Endeavors led, with participation from BMW iVentures, Next47, Samsung Catalyst Fund, and Seraphim Space.

Monumental, a Dutch developer of construction robots, raised $25 million. Plural and Hummingbird co-led, with participation from Northzone, Foundamental, and NP-Hard Ventures.

Hippo Harvest, a developer of advanced greenhouse systems for controlled agriculture, raised $21 million in Series B funding. Standard Investments led, with participation from Congruent Ventures, Amazon's Climate Pledge Fund, Hawthorne Food Ventures, and Energy Impact Partners.

Sage Geosystems, a provider of geothermal energy technologies, raised $17 million in Series A funding. Chesapeake Energy led, with participation from Arch Meredith, Helium-3 Ventures, Virya, Nabors Industries, and Ignis Energy.

Celadyne, a developer of nanoparticle hydrogen coatings, raised $4.5 million in seed funding. Dynamo Ventures and Maniv co-led, with participation from EPS Ventures.

Pacifico Biolabs, a producer of alternative seafood utilizing fermentation technology, raised $3.3 million in pre-seed funding from Simon Capital, FoodLabs, Exceptional Ventures, and Sprout & About Ventures.


TPG raised $12 billion for its ninth flagship private equity fund and $3.6 billion for a healthcare-specific fund. The raises fell short of a combined $18.5 billion target.

Accolade Partners raised north of $1 billion across multiple growth-stage funds-of-funds.

.406 Ventures raised $265 million for its fifth fund.

AIX Ventures raised $202 million for its second fund.

RW3 Ventures raised a $60 million debut fund.

Hamilton Lane is raising its inaugural RMB-denominated secondaries fund.


1. OpenAI doesn’t actually own its venture fund.

• Dan Primack takes a look at the unique structure of the OpenAI Startup Fund, which, despite its name, is actually owned by Sam Altman. — Axios


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