Alternative Lender Deal Tracker

Direct Lenders: seizing opportunity in an uncertain world

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Key findings

  • A 34% increase in Alternative Lending deals compared to the previous year proves that uncertain political, geopolitical and macro-environment events did not deter Direct Lenders - lending in Q2 alone reached 102 deals, a 31% increase compared to the same period in 2017

  • Continued Brexit uncertainty raises questions regarding UK interest rates, the price of Stirling and the role of the Bank of England in a worst case scenario of no deal next March. However, we predict continued growth in deal volumes for the remainder of 2018 given that Direct Lenders continue to increase their market share and deploy record levels of capital

  • The US increased short term interest rates for a third time this year. Recently, the yield on the benchmark 10 year US treasury reached 3.2%, its highest level since 2011, and up a notable 83 basis points so far in 2018. Whilst this increases pressure on others to follow suit, the immediate reaction affected the value of Emerging Market (EM) assets, entering EM into a bear market

  • Q3 of 2018 marked the worst quarter in eight years for European fundraising, said to be fuelled by a sharp decline in investors’ appetite for U.K. PE dedicated funds in light of Brexit

  • PE investors are waiting for better times, as it would be hard for 2018 vintage funds to outperform in the context of historic high EV multiples of 11.1x YTD August 2018 according to LCD. It is therefore not unsurprising that structured strategy is popular with end investors toward the back end of the cycle, as it provides downside protection for investors

  • When the cycle turns we expect the opportunity set to increase for alternative lenders, as banks are typically the first to hit the brakes when the economy is under pressure


Insights into the Deloitte Alternative Lender Deal Tracker

Currently covers 66 leading Alternative Lenders. Only UK and European deals are included in the survey.

600
Total deals completed
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300
Euro deals completed
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274
UK deals completed

*For the purpose of the deal tracker, we classify senior only deals with pricing L + 650bps or above as unitranche. Pricing below this hurdle is classified as senior debt.

How much funding has been raised by which Direct Lending managers?

Global
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Global Direct Lending fundraising by quarter



Cumulative number of deals per country

Largest geographic markets
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Background

Our Debt Advisory team has been in active dialogue with the leading European Alternative Lenders to set up a quarterly database, which monitors the primary European deal activity involving these lenders. 66 alternative debt funds currently participate in the Deloitte Alternative Lender Deal Tracker and the results are released to interested parties on a quarterly basis in a public version of the tracker.

Debt & Capital Advisory

The Debt and Capital Advisory team is an integral part of Deloitte's Financial Advisory practice, providing independent advice and world class execution across the full spectrum of debt markets through the firm's global network.

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Key contact

Floris Hovingh

Head of Alternative Capital Solutions


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