Direct lenders perform 484 European deals in 2019, an all-time record

In fundraising terms, $32.8bn raised in 2019 by direct lenders, compared to the previous record of $27bn in 2017.

Non-bank or direct lending saw a total of 484 European deals in 2019, an all-time record and a 13% increase on 2018’s total. The latest Alternative Lender Deal Tracker from Deloitte showed deal count grew at its fastest pace last year since 2017. In contrast, leveraged loans fell 13% year-on-year (according to Leveraged Commentary & Data).

Deloitte’s tracker also revealed that $32.8bn of funds was raised in 2019 by direct lenders, another record compared to the previous high of $27bn in 2017. The number of funds closed was relatively low at 26, indicating that the average size of fund has increased in comparison with previous years.

Floris Hovingh, head of Alternative Capital Solutions at Deloitte, commented: “Following a strong year in 2019, direct lenders have taken a step back to see how the impact of COVID-19 unfolds. Whilst most are focussed on portfolio reviews others have turned to secondary market opportunities - where many loans were trading as low as 80p in the pound, giving a yield of c.10%+. This is much higher than direct lending deals before the pandemic.”

Hovingh continued: “2020 will be the year for newly-established credit opportunity funds positioning themselves for the wave of balance sheet restructurings. This will occur over the next 18 months as we get to grips with the full impact of the COVID-19 across European markets.”

Chris Skinner, head of the Debt Advisory team at Deloitte, concluded: “Direct lenders with their long-term capital provide an important counter-cyclical ballast while the liquid credit markets remain closed and banks are hesitant to lend off their own balance sheets.”

End

Notes to editors

About the research
Deloitte’s Alternative Lender Deal Tracker covers 57 major alternative lenders across Europe, covering the period up until the end of December 2019.

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