LONDON (Reuters) - Private equity firm Cinven has sealed around 1 billion euros in financing from Deutsche Bank (>> Deutsche Bank AG), RBC (>> Royal Bank of Canada) and UBS (>> UBS AG) for its 1.5 billion euro (1.26 billion pounds) buyout of industrial ceramics firm CeramTec, banking sources said on Monday.

Cinven said over the weekend it had agreed to buy Ceramtec, beating rival private equity firm BC Partners in bidding for the Germany-based industrial ceramics unit of U.S. chemicals maker Rockwood Holdings (>> Rockwood Holdings, Inc.).

The financing is expected to include a mixture of leveraged loans and high yield bonds, denominated in both euros and dollars. It is also expected to be covenant-lite, a structure that offers little or no protection for lenders via financial tests.

Bankers said the rest of the deal has been funded with equity.

The financing will be sold to a number of banks and European and US institutional investors in a general syndication phase that is due to be launched shortly, the sources said. The deal will be a welcomed relief for banks and investors eager to invest in deals, following a dearth of M&A this year.

Debt on the deal will equate to around 7 times Ceramtec's approximate 135 million euro earnings before interest, taxes, depreciation and amortization (EBITDA).

CeramTec is a leading manufacturer of high performance ceramics for applications in the medical, automotive, industrial and electronic markets. It had revenues of 425 million euros in 2012 and has more than 3,000 employees at 18 facilities worldwide. ($1 = 0.7496 euros)

(Editing by Patrick Graham)

By Claire Ruckin