Europe powers ahead as deal volumes hit record

The UK remains out in front but opportunities are growing across the continent.

The European markets are rebounding fast. Figures from the latest Alternative Lender Deal Tracker, published by Deloitte, show that European non-bank deals doubled year-on-year in the first half of 2021, with 147 direct lending transactions taking place in the second quarter on the back of 186 in the first three months of the year.

That total of 333 transactions completed in the first half is only a whisker behind the 386 direct lending deals that closed in the whole of 2020, after deal volumes saw a dramatic covid-induced slowdown. Leaving the pandemic aside, though, Q2 2021 is the busiest second quarter on record, according to Deloitte, as many credit investors across Europe report business levels unlike anything they have ever seen before.

The UK market continues to be the most mature of Europe’s direct lending markets, accounting for more than a third of all the deals taking place on the continent, and followed at some distance by France, Germany and then the Benelux. But across Europe, private lenders continue to grow their market share against the banks, with debt funds able to both defend and enhance their position thanks to growing appetite for their offering from both institutional investors and borrowers.

These latest figures show the impact of the pandemic on deal activity has faded quickly and the market has proved its resilience with record European unitranche activity in the first half of 2021. High-quality assets continue to come to market and debt funds are playing a fast-growing role in financing deals across all European markets.