Europe sets Q2 record for deal volumes as economic recovery gathers pace

Increased interest in businesses services deals and appetite for ESG-linked loans were major drivers of transactions in Q2 2021.

European mid-market deal activity among alternative lenders set a Q2 record in 2021, according to figures from Deloitte.

In its latest Alternative Lender Deal Tracker report, Deloitte revealed 147 deals were completed in Q2 2021 making it the most active second quarter on record and the fifth most active quarter since the tracker began in Q4 2012.

While transaction numbers are lower than the all-time quarterly record of 186 seen in the first three months of the year, continued large volumes of deals suggest alternative lenders are active in supporting Europe’s economic recovery following the coronavirus pandemic.

The UK remains the most active market with 52 deals, though its market share has slipped from 41 percent in Q1 to 38 percent in Q2. France and Germany were able to grow their market share to 20 percent and 15 percent respectively.

LBOs remain the main type of deal by purpose making up 44 percent of all deals in the first half of the year, though growth capital financings increased from 6 percent in the first quarter to 13 percent in the second, making up 9 percent of H1 activity.

By sector, TMT deals have continued to be popular after dominating in both Q4 2020 and Q1 2021. However, business services deals increased in the second quarter and are now level with TMT deals across the whole of H1, with each making up 22 percent of completed deals. Healthcare was just behind with 18 percent of deals followed by financial services on 13 percent and manufacturing on 8 percent.

Deloitte also noted a strong trend towards sustainability-linked loans (SLLs) in Europe and globally. Figures from Dealogic Global found there have been SLL loan issuances worth $25.2 billion in Europe during H1 2021, up sharply from just $6.74 billion in the whole of 2020.