Mandated Lead Arranger (MLA)

In which types of transactions does a Mandated Lead Arranger operate?

The Mandated Lead Arranger (MLA) plays a central role in syndicated financing, where multiple banks join forces to provide a single, large scale loan to a corporate or financial institution.

MLAs are typically involved in major financing transactions such as:

In these transactions, the participating banks form a syndicate, but the MLA acts as the leading bank from the earliest stages of the deal.


What is the role of the Mandated Lead Arranger?

The MLA is responsible for structuring the financing, coordinating stakeholders, negotiating with the borrower and securing the participation of other lenders. Its responsibilities include:

1. Credit structuring

The MLA defines all major features of the financing, including:

  • loan terms and conditions;
  • the interest margin;
  • maturity and repayment profile;
  • financial covenants required from the borrowe;
  • any collateral or guarantees required.

2. Due diligence

The MLA reviews and analyses the due diligence materials prepared by advisors (audit firms, lawyers, M&A advisors, technical consultants), with the objective to assess the borrower’s financial strength, creditworthiness, and risk profile.

3. Negotiation and documentation

The MLA:

  • negotiates the financing terms with the borrower;
  • coordinates with legal counsel to draft and finalise the credit agreement and all related documentation.

4. Coordination of all stakeholders

This includes:

  • the borrower;
  • participating banks; 
  • legal, financial and technical advisors.

5. Syndication

The MLA identifies and brings in other financial institutions wishing to participate in the financing, then coordinates their entry into the syndicate.


Why is the MLA important for borrowers?

For the borrower, the Mandated Lead Arranger is a key point of contact:

  • a centralised point of entry;
  • comprehensive expertise in structuring, negotiation and deal arrangement;
  • a significant contribution to the financing (and therefore a higher level of risk-taking);
  • a major role in ensuring the proper execution of the transaction.

 

Examples of transactions where Societe Generale acted as MLA