European deal volume surged to record level in Q3 2019

Despite a strong third quarter, a slow market earlier in the year means 2019 transaction numbers remain lower than the previous year's.

The volume of European private debt deals surged to its highest-ever level in the third quarter of 2019, according to research by Deloitte.

The company’s latest Alternative Lender Deal Tracker recorded a total of 147 mid-market private debt transactions during Q3, easily beating the previous record of 129 deals seen in the third quarter of 2018.

Each of Deloitte’s four regions – the UK, France, Germany and Other European – saw deal volumes jump by more than 25 percent compared with Q2 2019. Germany saw the biggest increase, with the number of transactions growing 50 percent to 18 – a record high – as alternative lenders became more established thanks to acquisition finance deals by private equity houses.

Despite political troubles during the third quarter in the UK, which would culminate in an early general election in December, the country saw its highest-ever level of deal activity with 46 transactions, up from just 36 in the previous quarter.

France saw a 44 percent increase in deal numbers during the quarter with 36 transactions. The rest of Europe also had a particularly strong three months in which it managed to exceed the UK total with 47 deals, thereby indicating private debt’s growing penetration outside the continent’s core markets.

Deloitte said the increase in deal numbers was likely to have been driven by the increasingly large funds raised by European managers that need to be deployed. The figures contrast with the lower fundraising numbers seen in 2019 as many managers focus on investing the capital they raised in previous years.

Despite the record numbers in Q3, total deal numbers in the first nine months of 2019 were 3 percent lower than during the same period of 2018. This was largely due to a very slow Q1 in which only 78 transactions took place, compared with 89 deals during the first quarter of 2018.