Last year saw the highest number of direct lending deals since Deloitte began tracking private debt markets in 2012. According to the latest Alternative Lender Deal Tracker, 785 deals were closed in 2021, or a year-over-year increase of 89% from 415 deals. in 2020. Additionally, the 217 deals completed in Q4 2021 were just short of the Q3 2021 quarterly record of 226 deals.

Overall, the total number of alternative lending arrangements in Europe over the past ten years has now reached 3,534. Direct lenders consist of a wide range of non-banking institutions that lend directly to businesses in guaranteed upper levels of the capital structure.

The UK remains the epicenter of European direct lending, accounting for 35% of all transactions in 2021. This figure is down slightly from the 37% seen in 2020, reflecting a more favorable attitude from continental European borrowers to with regard to non-bank lending solutions.

Robert Connold, Head of Alternative Lending in Debt Advisory at Deloitte, said: “Over the past decade, non-bank lenders have fundamentally reshaped the market. Capital continues to be deployed at record rates in the private debt market, and borrowers’ strong appetite for new debt looks set to stay.

“2021 was a standout year for direct lending, boosted by the deployment of dry capital built up in 2020. The extraordinary number of deals comes amid a burgeoning M&A landscape – despite concerns about a stronger economic recovery. broad and the prospect of rate hikes in early 2022. For the remainder of the year, I expect ongoing inflation, interest rate and supply chain concerns, coupled with consequences of the invasion of Ukraine by Russia, lead to the volatility of the number of agreements concluded.

By sector, technology, media and telecommunications (TMT) remained the most active sector for direct lending in Europe, accounting for nearly a quarter of deals in 2021. In the UK alone, services to Enterprises, Infrastructure and Professionals regained the top spot for deals activity in 2021 accounting for 29% of deals, while TMT took a 20% share.

Leveraged buyouts continue to be the primary driver of deal activity, accounting for 41% of deals in 2021. Meanwhile, M&As and refinancing were also identified as drivers for 24% and 21% transactions respectively in the last quarter of 2021.

-ENDS-

Note to Editors

Deloitte’s Debt Advisory team maintains a database with major European alternative lenders to monitor core European transaction activity. This time, 68 alternative debt funds participated in the Deloitte Alternative Lender Deal Tracker, which is published quarterly.

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