Ares, Eurazeo, Barings Among Top 2023 European Direct Lenders - Lower Mid Market Deals Account for 80% of Transactions Despite Record Unitranche Size Raised

NEW YORK, Jan. 23, 2024 /PRNewswire/ -- Reorg, a global provider of credit data, analysis and intelligence, has released its 2023 European Direct Lender league tables data. The league tables rank European direct lender activity in 2023 across factors including region and sub-region, loan size and sector. Additionally, the report explores overall deal flow in 2023 and lender activity in ESG-related deals. Reorg has built-out the final and fastest growing asset class to its repertoire of debt markets coverage which includes stressed/distressed, leveraged loans, high-yield bonds, credit analysis and ESG.

Deal Flow

European direct lending activity in 2023 totalled 680 deals with lower mid-market deals by far the most popular debt range, representing 80.5% of the market. Deal flow remained relatively equal throughout the year, with most deals completed in Q3 (184) marginally ahead of Q4 (173). 2023 saw more bolt-on acquisitions (40.7%) than any other use of proceeds, with buyouts (31.5%) and refinancings (14.3%) following. The majority of the deals were completed with companies based in the UK and Ireland region (207), with France (151) and DACH (115) placing second and third.

Unitranche deals dominated the market, making up 71.1% of the deals seen in 2023. Most notably, Permira and Blackstone's proposed acquisition of online classifieds group Adevinta was backed by a record-breaking €4.5 billion unitranche facility. The deal surpassed the previous record from Hg and TA Associates-owned business management software provider The Access Group, which secured a £2.3 billion unitranche, part of its £3.5 billion debt refinancing package, in June 2022.

Split by sector, Software-related borrowers accounted for the largest slice of direct lending activity, with 143 deals taking place in 2023. Business Services-related and Healthcare & Life Sciences issuers ranked a close second and third with 122 and 116 deals respectively.

Average leverage multiples steadily declined from a high of 5.2x in 1Q23 to 4.8x in 4Q23, indicating a reduced appetite for lenders to finance higher levels of debt towards the end of the year. Average margins followed a similar trend, showing an average of 687 bps in 1Q23 and decreasing to 654 bps in 4Q23.

ESG

ESG-related deals gained traction throughout the year, accounting for only 29.6% of the total number of deals in 1Q23, to 41.8% in 4Q23. Software-related, Healthcare & Life Sciences and Business Services-related firms were the three most active sectors in the ESG space, with 55, 43 and 40 deals taking place in 2023, respectively.

Access the full report here.

About Reorg

Founded in 2013, Reorg combines powerful technology along with financial and legal analysis and reporting to provide a granular and holistic view of hard-to-find credit information. Reorg's analytics, sourced from a variety of public and proprietary data sources, and breaking news updates on sub-investment grade credit are a mission-critical solution that drives significant efficiencies for customers and democratizes data access to complex and opaque information. Reorg has experienced rapid growth over the last decade and today serves more than 30,000 professionals across the world's leading hedge funds, asset managers, investment banks, law firms, professional services and advisors. To learn more, visit Reorg.com.

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