Unitranche rises in Germany

As debt funds break into the German market, they are working more closely with banks who realise they cannot turn back the tide.

The latest MidCap Monitor survey from GCA Altium shows that – on the back of a 166 percent surge in sponsored unitranche deals in the German mid-market last year – debt funds almost trebled their level of deal activity in the country.

This raised their share of German midmarket LBO deals to more than 30 percent – incredibly around the same figure as that in the UK, assumed to be by far Europe’s pre-eminent private debt fund market.

Insiders suggest the “first out / last out structure was a big factor in increasing unitranche activity, particularly from private debt funds.

Costs can be lowered with this structure by utilising cheap bank debt, but the enhancement of bank and debt fund cooperation it creates is also likely to be lead to greater debt fund involvement in the future.