News & Analysis

France sees 50% rise in private debt capital

French alternative credit activity grew strongly in 2018, though it remains concentrated among a small number of funds.

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Capital raised by French private debt funds increased by 48 percent in 2018, according to research by Deloitte and local industry body France Invest.

A survey of French fund managers and international firms investing in the country found a total of €3.5 billion had been raised by six funds to invest in French private debt. This compared with €2.39 billion in 2017 and was more than three times the €1 billion raised in 2016.

The €7 billion of capital invested marked a 16% rise on 2017 and took place across a total of 147 transactions, an increase of 20% on the number for the previous year.

The research found 65 percent of private debt deals backed an acquisition by an equity sponsor while 35 percent were sponsorless. France Invest said the latter figure showed that private debt was becoming a source of financing in its own right.

The agency also said that French funds were becoming increasingly active outside France, with a historically high level of deals – 24% – taking place in other jurisdictions.

Guillaume Leredde, assistant director of Deloitte Debt Advisory, said: “Private debt funds continued to grow strongly in 2018 and we also saw the arrival of new foreign inflows, confirming France’s attractiveness in this market.

“The transaction data show that the French market is still concentrated over the 2017-18 period, with 45% of the amounts invested provided by five funds, including two UK-based funds. The arrival of new entrants will lead to a greater diversity of financing offers for companies, as we have seen in the UK in recent years.”

France Invest added that it wants to expand its activities in France to encourage greater use of private debt. Chairman Dominique Gaillard said: “In this strongly developing private debt market, France Invest is taking determined action to encourage funds active in France and not yet members of the association to join it. It is by bringing these professionals together that we will be able to make this type of investment, which is useful for companies, even better known.”