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European recovery drives stampede of deals and ESG linked issuances

Deloitte Alternative Lender Deal Tracker Autumn 2021

This issue covers data for the first half of 2021 and includes 333 Alternative Lender deals closed during that period. While this represents a 36% increase in the number of deals from H2 2020, it represents a 106% increase from H1 2020.

Key findings - Autumn 2021

By sector:

  • After seeing TMT deals dominate in Q4 2020 and Q1 2021, Business Services deals surged in the second quarter to equal TMT deals in H1 2021, with both comprising 22% of the completed deals to date. 
  • Healthcare trailed close behind with 18% of total deals, whilst Financial Services and manufacturing deals remained constant at 13% and 8% respectively.

By deal purpose:

  • The majority of the deals are M&A related, with 71% of the UK and European deals being used to fund a buy out. Of the 578 deals in the last 12 months, 72 deals did not involve a private equity sponsor.
  • Leveraged Buyout (LBO) activity remained strong and comprised 44% of H1 deals, though growth capital deals in particular saw a substantial surge in numbers, going from 6% of deals in Q1 to 13% in Q2, and 9% for the half year. The H1 total of 31 growth capital deals suggests borrowers are becoming increasingly willing to support organic growth opportunities for expanding businesses.

By deal flow & outlook:

  • Deal flow has remained at impressive levels throughout the spring and early summer of 2021 and shows no sign of slowing down in the coming months, as capital continues to be deployed at record rates across the private debt market, and borrower appetite for new debt remains strong across sectors.
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