(14 October 2024 – Europe) A record number of private credit deals have been closed in Europe, eclipsing 252 transactions in Q2 2024 according to Deloitte.
Importantly the surge in private credit deals are primarily smaller and involve enterprises with sub €75 million annual turnover according to Wells Fargo data however, highlighting a lack of billion-dollar transactions.
The US$1.7 trillion private credit industry faces a surplus of “dry powder” capital but limited large acquisition opportunities with increased competition from banks muscling back in on major debt deals. Banks have staged a notable comeback in 2024, reclaiming US$30 billion of loans relinquished to private funds according to BofA analysis.
“Banks are back underwriting deals and competing aggressively” said Eversheds Sutherland Partner and Head of Private Credit, Ben Davis.
“Market perception is that we have now turned a corner from peak interest rates and inflation. All of this sets a scene for the postponed M&A activity for the last 18 months to flow through quickly in the coming quarters” stated Federated Hermes Head of Direct Lending, Laura Vaughan.