StepStone Group Inc. (NASDAQ:STEP), a global private markets firm, has entered into a material definitive agreement, issuing $175 million in senior notes, as per a recent 8-K filing with the Securities and Exchange Commission. The 5.52% Series A senior notes, which mature on October 22, 2029, were issued by StepStone Group LP, the company's operating subsidiary.
The notes were sold in a private placement on Monday, exempt from registration under the Securities Act. Interest on these notes will be paid semi-annually, starting April 22, 2025, and the first interest payment will commence on April 22, 2025. Proceeds from the sale are earmarked for general corporate purposes, including investment opportunities, debt repayment, and distributions.
StepStone Group has the option to prepay the notes, in whole or in part, any time before maturity, with a minimum prepayment of 5% of the outstanding principal. If prepaid on or after April 22, 2029, no make-whole amount is due, provided there is no default or event of default at the time.
The note purchase agreement includes several covenants. The Partnership must maintain a Total Net Leverage Ratio of no more than 3.5 to 1.0, and Fee Paying Assets Under Management must not fall below a specified threshold.
Additionally, at least 80% of all management fees must be received directly by the Partnership and its Material Subsidiaries without significant deferral, waiver, or reduction. The agreement also restricts the incurrence of certain secured indebtedness.
In the event of a change of control, StepStone Group is required to offer to repurchase the notes at their principal amount plus accrued interest, without an additional make-whole amount.
The article is based on an 8K filing.
In other recent news, StepStone Group Inc. has reported impressive earnings and revenue results, with an Adjusted Net Income per Share of $0.33, surpassing the Bloomberg LP Street consensus and JPMorgan's estimates.
The firm also disclosed robust fourth-quarter fiscal 2024 results, recording a GAAP net income of $82.5 million. The company also announced its intention to conduct an underwritten offering of 4,099,997 shares of its Class A common stock, with Goldman Sachs & Co. LLC serving as the sole book-running manager.
In other recent developments, StepStone shareholders elected five directors at the recent Annual Meeting of Stockholders. They ratified the appointment of Ernst & Young LLP as the independent registered public accounting firm. The executive compensation structure and issuing shares under an Option Agreement were also approved.
In response to these developments, Oppenheimer raised its stock price target for StepStone Group, maintaining an Outperform rating, while JPMorgan also increased its price target, maintaining an Overweight rating. StepStone's management also reported approximately $6 billion in new funds, demonstrating the company's continued growth and strong performance.
InvestingPro Insights
StepStone Group's recent issuance of $175 million in senior notes aligns with its strong financial performance and growth trajectory. According to InvestingPro data, the company has demonstrated impressive revenue growth of 283.69% over the last twelve months as of Q1 2025, with a robust operating income margin of 25.74%. This financial strength supports StepStone's ability to take on additional debt for strategic purposes.
InvestingPro Tips highlight that StepStone has raised its dividend for 3 consecutive years, with a current dividend yield of 2.18%. This consistent dividend growth, coupled with a strong return of 120.46% over the last year, suggests that the company is well-positioned to manage its new debt obligations while continuing to reward shareholders.
The company's market capitalization of $7.25 billion and its trading near its 52-week high indicate investor confidence in StepStone's business model and growth prospects. For investors seeking more comprehensive analysis, InvestingPro offers 12 additional tips for StepStone Group, providing deeper insights into the company's financial health and market position.
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