UK NON-BANK lending increased by 48 per cent quarter-on-quarter in the final three months of 2016, as businesses shook off uncertainty over the EU referendum, new research shows.
Deloitte’s latest Alternative Lender Deal Tracker recorded 31 UK non-bank deals in the fourth quarter of 2016, based on the 55 firms it tracks.
The boost was attributed to “a bounce back in transaction activity following a wait-and-see period after June’s referendum result.”
Across Europe as a whole, 267 alternative lending deals were made in 2016, up two per cent from 2015. However, there was a UK lag with uncertainty in the first half of the year sending transactions in the country down 13 per cent.
While the total number of deals were up, the overall value dropped by almost 40 per cent to $23bn (£18.5bn) year-on-year.
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Fenton Burgin, head of UK debt advisory for Deloitte, remained positive, stating that there are still around 125 direct lending funds in the market seeking to raise fund commitments of around $50bn, of which $17bn is in Europe.
“Non-bank lending held up last year, just beating 2015’s total of 263 deals,” Burgin said.
“This despite a decrease in European M&A volumes around the time of EU referendum.
“With high levels of competition for good assets, the flexible financing offered by non-bank lenders will attract private equity sponsors.
“However, some managers with global direct lending funds could refocus lending capital back to US markets with further interest rate rises anticipated and a stronger economic outlook than some European markets.
“In the UK, M&A levels are likely to be subdued in the next twelve months; hence increased focus of direct lending managers towards faster growth markets in the rest of Europe.”
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