European mid-market alternative lending grew by 9 percent in 2018 despite falling fundraising figures, according to figures from Deloitte.

Deloitte’s Alternative Lender Deal Tracker, which covers private debt loans to mid-market companies in Europe, found a total of 416 deals were completed during 2018, up from 382 in 2017.

The increase in deal activity comes at a time when total fundraising activity has fallen, though this was notable coming off a record fundraising year in 2017. With large amounts of capital raised and significant dry powder in the industry, deal numbers can be expected to remain strong as alternative lenders seek to deploy their record hauls.

The UK remains the largest market in Europe and ongoing political uncertainty over the country’s departure from the European Union has failed to curb the growth of private debt lending. During 2018, the UK saw 153 completed deals accounting for 36.8 percent of the total. This was a slight increase on 2017 when the UK’s 139 deals made up 36.4 percent of the European total.

The final quarter of 2018 produced a fairly typical mix with the UK accounting for 35 of the 98 deals completed in Q4. France followed with 24 deals and Germany was in third place with 11 deals.

Unitranche is by far the most popular debt structure provided by alternative lenders, accounting for 62 percent of all deals in the UK and 52 percent across the rest of Europe, with senior debt in second place across both geographies. The majority of loans in both the UK and continental Europe are to fund M&A, either through leveraged buyouts or bolt-on acquisitions, followed by refinancings.

Deloitte also noted that private debt is set to see continued growth, and said: “At the current growth rate, the private debt asset class is forecast to hit $1.4bn globally by 2023. This implies the asset class would surpass real estate to become the third-largest alternative asset after hedge funds and private equity. With size comes infrastructure, and it can’t be long before we see funds adopting a bank style model, hiring syndications teams, underwriting even bigger deals and syndicating part of the debt.”