After only 32 debt financings in the German LBO market in the first half of this year, 37 were recorded in the third quarter, according to the latest MidCap Monitor survey from investment bank GCA Altium.
The survey, which tracks financings with a credit volume of between €20 million and €500 million, found that the banks – which have seen their market share steadily eroded by debt funds – experienced a prolific period.
Having closed 14 financings in the first half of the year, the banks closed 20 in the third quarter – in the process, raising their market share versus the debt funds from 44 percent to 54 percent. Debt funds also enjoyed an upswing, with 17 transactions in the three-month period compared with 18 in the first six months.
One reason for the banks’ improving fortunes was that many of the Q3 deals were add-on financings or re-caps/re-financings, which banks like because they have less aggressive timelines than auction processes. From the first half to the third quarter, the market share claimed by add-on acquisitions increased from 9 percent to 19 percent.
As of September, the most active private equity firms in the German LBO market were Waterland and DBAG, with six deals each, while SEB was the most prolific bank with 13 transactions, followed by Unicredit on 11 and Commerzbank on 10.
Despite the upsurge in bank activity, the survey does not think there will be any let-up in debt fund impact, as they become an increasingly common presence in €50 million-plus financings, with some funds even able to write €300 million tickets.
The survey notes that the increasing popularity of debt funds has been seen not just in Germany but also in Sweden, Spain and the Netherlands. These markets are beginning to catch up with the more mature markets of the UK and France.
The survey also found a rise in unitranche deals across the region. In the third quarter, there were 82 unitranche deals in Europe compared with 103 in the first half of the year. The UK recorded 24 such deals, France 21 and Germany 17.