In recent years, the Benelux region has gradually emerged as the solid fourth-place market for European private debt, with a growing deal volume, placing it comfortably on the tail of the UK, France and Germany by deal volume. In the second quarter, the Benelux region saw 22 transactions, equivalent to one in every 10 transactions completed in Europe, according to Deloitte’s Alternative Lender Deal Tracker. That continues the solid growth of the Benelux market, where deal transaction volume rose 55 percent to 79 deals in the year ending March 2022.
Number of funds focused on Benelux to close since 2017
Total amount targeted by Benelux-focused funds in market
The market leader is the Netherlands, which is responsible for three-quarters of all Benelux deals. Reza Atighi, CEO of European fund manager Arrow Netherlands, says: “The private credit market in the Netherlands is seeing clear growth, as the incumbent banks continue to retrench from selected segments, and as the underlying demand for credit remains very strong.
He says credit funds are seeing particularly strong opportunities in real estate lending, spanning the spectrum of bridge lending, property development and buy-to-let investments. Alternative lenders are also building up a growing footprint in newer finance areas, such as leasing and SME finance.
Atighi says the economy is holding up well and the universe of private lenders is growing. “So far in the Netherlands the economy has continued to perform well, despite the building headwinds linked to inflation, energy prices and higher interest rates.
“Looking out, however, there is a clear expectation that also the Dutch economy will be impacted, with knock-on effects on asset quality and credit demand.”
He says the shift from banks to alternative lenders is gathering pace in the region, and there continues to be healthy interest in the Dutch market from international credit funds. “Probably the key impediment in the Netherlands is the yield levels attainable, which currently make it challenging for certain private debt funds to operate. Given the expected rise in yield levels, and broader dislocation in the markets, pricing levels are expected to adjust to new, more attractive levels.”