Direct lenders rise to challenge from banks with record-breaking fundraises and blockbuster deals – 1H24 European Direct Lender Rankings
The first half of this year saw European direct lenders chalk up significant wins in the face of resurgent competition from banks, with five deals inked in the first six months of 2024 having entered the top-15 largest transactions of all time amid a sharp rise in deal volume.
Overall, direct-lending deal volume totalled EUR 52bn, representing a year-on-year increase of 85%, according to Debtwire’s 1H24 European Direct Lender Rankings report.
European direct lenders agreed 506 new deals in 1H24, a 62% increase on 1H23 and nearly 100 more than the three-year average.
Of these transactions, private-debt packages provided to PIB Group, Datix, SumUp Payments, Audiotonix and Aaereon represent five of the largest-ever European direct-lending deals, with an aggregate value of just over EUR 8bn. Some of the biggest names in private credit including Goldman Sachs, Blackstone and Blue Owl Capital participated in these deals.
Blue Owl Capital financed PAI Partners’ leveraged buyout of Audiotonix solo and was among a club of six lenders to Datix. The New York-headquartered alternatives titan fended off stiff competition from European lenders amid an increasingly prevalent trend dubbed by Debtwire as the ‘transatlantic credit flight’, which has seen US-based asset managers encroach on European counterparts’ turf while driving a wave of consolidation on the continent.
This year, direct-lending fundraising records have been shattered despite a general slowdown witnessed over the past 12–18 months that prompted certain asset managers including Fidelity and Polen Capital to retrench from the market in 1H24.
Ares Management recently announced it had secured nearly USD 34bn for its latest flagship direct-lending vehicle in a fundraise that smashed previous global records. Behind Ares was HPS Investment Partners, which in June announced it had raised more than USD 21bn to invest in direct-lending deals globally. A month prior, Goldman Sachs raised more than USD 20bn for its senior direct-lending strategy.
These three fundraises alone – announced in the space of just eight weeks – represent more than USD 75bn of capital, further intensifying competition to deploy.
The first half of 2024 was not without challenges, however, largely due to increased competitive pressure from banks – especially with regards to take-privates, for which syndicated loan pricing undercut even tightly priced pitches by direct lenders.
Banks came up trumps when competing to finance a series of recent de-listings in Europe, including that of Exclusive Networks, as well as Keywords Studios, as revealed by Debtwire.
In terms of proceeds, the majority (more than half) of direct loans, high-yield bonds and leveraged loans were used for refinancings. Just over a third (36%) of direct loans were deployed on leveraged buyouts, compared with less than 8% of high-yield bonds and leveraged loans — cementing direct lending’s position as the go-to financing option for private equity-led takeovers.
1H24 European Direct Lender Rankings
Goldman Sachs Private Capital topped Debtwire’s European Direct Lender Rankings for 1H24. By measure of deal count, excluding add-ons, Goldman Sachs inked 18 new deals across the first six months of this year, giving it a market share of 6.3%. Close behind is Ares, having executed 17 deals with a market share of 5.9%. Blackstone Credit took third place, having done 16 deals that give it a market share of 5.6%.
When factoring for add-ons, Ares took the top slot, with 36 deals and a market share of 7.9%. Goldman Sachs slipped into second place, with 27 deals and a 5.9% market share. In third place is Eurazeo, which in 1H24 concluded 23 deals giving it a market share of 5.1%.
In the large-cap arena, by measure of senior and subordinated deal count, Goldman Sachs came out on top, with 14 deals giving it a market share of 28%. In second place is Apollo, with 10 deals and a market share of 20%. Blackstone Credit and Park Square took the joint-third slot, each with eight deals and a 16% market share.
Meanwhile in the mid-market, by measure of senior and subordinated deals excluding add-ons Ares tops the charts, with 10 deals and a 9.3% market share. Close behind, in second place with nine deals and a market share of 8.3%, is Pemberton. In joint-third place are Arcmont, Bridgepoint Credit and Kartesia, having each done seven deals, giving each of them a 6.5% market share.
Finally, the small-cap rankings. CVI took the top slot by measure of senior and subordinated deals, excluding add-ons, having done 10 deals giving the lender a market share of 15.2%. Investec Private Debt takes second place, with eight deals and a market share of 12.1%. And in third place is HF Private Debt, with six deals and a market share of 9.1%.
Debtwire’s direct lender rankings highlight the key players in the private debt market. The report contains active direct lender fund rankings, along with market analysis.