Unitranche financing reached new heights, with Q4 closing at 150 transactions—up 28% from Q3—and an annual total of 489 deals, marking a 38% increase over 2023.
Unitranche debt is a hybrid model combining different loans into one, with an interest rate for the borrower that sits between the highest and lowest rate on the individual loans.
In its latest MidCapMonitor report, Houlihan Lokey (HL) provides a comprehensive analysis of pan‐European private-equity-sponsored debt financing activity, spotlighting key markets including the U.K., Germany, France, Spain, Benelux, as well as the Alpine and Nordic regions.
Across major geographies, growth trends diverged. While the U.K., Germany, and France recorded significant quarter-on-quarter gains (rising by 48%, 33%, and 50% respectively), the Benelux region experienced a contraction compared to its previous quarter. In many markets, debt funds have managed to preserve or even expand their market share relative to traditional banks. For instance, in the U.K. and Germany, debt funds have secured roughly 70% and 56% of the market, respectively, although banks continue to dominate in some regions.
Financing transactions were driven by a mix of strategic initiatives. Debt funds have been particularly active in supporting add-on acquisitions while new financings and refinancing or dividend recapitalisations have also featured prominently. Pricing dynamics have been favourable: At the end of Q4 2024, HL’s European Private Performing Credit Index (PPCI) stood at an all-in yield of 9.74%, a 20 basis points decline from the previous quarter, reflecting ongoing downward pressure on base rates and credit spreads. The yield differential sat at 244 basis points above the European Leveraged Loan Index.
Thorsten Weber, managing director and head of sponsor finance observed: “During Q4 2024, lender financing appetite continued to improve”
Patrick Schoennagel, head of sponsored finance at Houlihan Lokey, echoed this optimism for the beginning of 2025 stating:” The European financing market is poised for sustained momentum.
Read more: https://www.fi-desk.com/private-credit-set-for-another-bumper-year-but-risks-rumble/
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