NON-BANK lenders in Europe saw more activity in the third quarter, with debt transactions in the sector rising by six per cent year-on-year.
According to Deloitte’s alternative lender deal tracker, 201 deals were recorded from non-bank lenders across Europe, up from 190 deals for the same period in 2015. As of November 2016, there were approximately 130 direct lending managers seeking to raise more than $50bn (£40.47bn) of new capital.
However, the deal tracker found that the UK was lagging behind the rest of Europe, with just 20 deals being completed in the third quarter of this year, compared with 47 on the continent.
“Deal activity is now stronger in mainland Europe than the UK as borrowers there start to recognise the flexibility non-bank lenders can provide,” said Fenton Burgin, head of UK debt advisory at Deloitte. “The European debt markets are still flooded with an excess of liquidity, approximately €41bn (£34.5bn), which will keep things favourable for borrowers.
“In 2017, we expect some global asset managers to refocus lending capital back to US markets with further interest rate rises anticipated and a stronger economic outlook than some European markets. However, many alternative investors already have funds committed to European strategies. Pressures on banks in Europe to deleverage their balance sheets either through the sale of non-performing portfolios or non-core asset sales should also deliver a boost in activity.”
Floris Hovingh, Deloitte’s head of alternative lender coverage, described the discrepancy between the alternative lender markets in the UK and the rest of Europe as “striking”. She added: “deal volumes were down by 21 per cent vs the prior year for the UK, as M&A activity was partly put on hold.
“However it is more than offset by the rapid growth elsewhere in Europe (up by 29 per cent) as direct lenders continue their march across the continent.”