Press releases

Direct lenders deploy €22.6 billion in the first half of 2019

14 October 2019

  • On current trajectory investment will overtake the €38.1bn invested in 2018 by the end of the year
  • Volume of direct lender deals down by 3% in H1 2019

Direct or non-bank lenders have deployed €22.6 billion in the first half of 2019. This translates into a predicted increase of 18% by the end of 2019, when compared to the €38.1bn spent in 2018. For the first time the Alternative Lender Deal Tracker from Deloitte gathers investment data from 50 funds across Europe, capturing not just the volume of deals, but their overall value.

By volume, there were 404 deals in the last twelve months to H1 2019, down 3% on the 414 deals during the last twelve months to H1 2018 in the UK and Europe.

Floris Hovingh, head of alternative capital solutions at Deloitte commented:

“Direct lending is growing rapidly into an asset class of its own as some banks pull back from riskier lending. Furthermore, the data shows that the deployment of cash is moving in sync with fundraising as fund managers write larger tickets. This means fears of an ‘overhang’ of un-deployed capital can now be put to bed. However the question remains if direct lending returns will remain consistent for the most recent crop of billion plus direct lending funds.

“Private debt managers typically extend buyout loans in the €30-to-€150 million range, but today’s data shows that larger funds have increased their ability to write tickets of up to €250 million and even €1 billion for some. By providing ever larger loans, these funds are now involved in deals that would likely have been funded through syndicated loans or bonds arranged by investment banks. For the private debt managers, this creates economies of scale in terms of origination, deal execution and monitoring.”

Chris Skinner, head of the debt advisory team at Deloitte, concluded:

“From the borrowers’ side, the European direct lending market is as attractive as it has been in recent years from a pricing, leverage and documentation perspective. We therefore expect borrowers to continue to take advantage of this positive environment over the next six months, even if there is potential for economic deterioration further down the line.”

End

Note to editors

About the research
Deloitte’s Alternative Lender Deal Tracker covers 50 major alternative lenders across Europe, covering the period up until the end of June 2019.

The deployment data (i.e. the capital deployed by the direct lenders) covers 50 lenders.

About Deloitte
In this press release references to “Deloitte” are references to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”) a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity.

Please see deloitte.com/about for a detailed description of the legal structure of DTTL and its member firms.

Deloitte LLP is a subsidiary of Deloitte NSE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.

The information contained in this press release is correct at the time of going to press.

For more information, please visit www.deloitte.co.uk

Member of Deloitte Touche Tohmatsu Limited

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