Nordics lead way to higher European deal numbers – report

Continental deals have driven the growth of private debt activity in Europe over the past twelve months as the UK’s dominance recedes and Nordic activity grows, according to figures from Deloitte.

The latest edition of Deloitte’s Alternative Lender Deal Tracker, which tracks mid-market direct lending activity across Europe, found that while UK deal activity increased by 13 percent in the 12-months to end of March 2018 compared with the previous year, activity in the rest of Europe was up 28 percent in the same period.

Deal activity in the Nordic region was notable in the quarter, having increased by 31 percent year-on-year as the region becomes more established for private debt investment.

Nordic private debt remains relatively small, with 17 deals completed in the year ending March 2018 but the region is exhibiting strong growth from a low base. Deloitte’s figures show that Sweden was leading the way, with deal numbers almost doubling to 11, while Norway, Denmark and Finland saw two deals each in the period.

Deloitte said the Nordic region is seeing strong growth because it offers borrowers quicker access to capital and with typically more flexible terms than banks are able to offer. The regulatory environment is also favourable, with Sweden requiring no business lending licence provided funds are not raised from the public, and Denmark also does not require a licence except where funds are securitised.

“In Norway and Finland, while lenders do require a permit to lend, gaining one is seen more as a formality than a significant hurdle,” Deloitte explained.

Elsewhere, while the UK continues to be the single biggest market, with 27 deals in the first quarter of 2018, France follows close behind with 20 deals, while Germany continues to lag with eight deals.

The first quarter of the year has seen lower activity than in 2017, down 7 percent in total, though still remains higher than almost all quarters prior to 2017. With record fundraising seen last year and record dry powder, Deloitte expects an uptick in deal activity through into 2019 as funds are deployed.