Ares and Eurazeo Shine in 2024 European Lender Rankings

Ares and Eurazeo Shine in 2024 European Lender Rankings

Octus, a leader in global credit intelligence and data, recently unveiled its European Direct Lender Rankings for 2024. This annual report categorizes various direct lenders in Europe based on key metrics such as their sector, region, debt range, and their adherence to Environmental, Social, and Governance (ESG) principles. The rankings reflect the competitive landscape of direct lending in Europe, marked by substantial growth and resilience.

Performance of Leading Lenders

Ares emerged at the top of the ranking with an astounding 84 deals, representing a market share of 6.4%. Close behind were Eurazeo, which completed 57 deals and garnered a 4.3% market share, and Goldman Sachs Private Credit, which secured 55 deals with a 4.2% market share. When factoring in non-corporate facilities, especially in real estate, these three firms maintained their leading positions with slightly adjusted market shares of 6.2%, 4.2%, and 4.1%, respectively.

Goldman Sachs Takes Lead in Large Transactions

Goldman Sachs Private Credit stood out as the most active lender in larger transactions, finalizing 48 deals for amounts exceeding €250 million. Blackstone Credit followed closely with 36 deals, while Arcmont, CVC Credit, and Park Square tied for third place with 28 deals. Meanwhile, Ares took the lead in mid-market transactions, completing 58 deals compared to Eurazeo's 55.

ESG Compliance Top Rankings

In terms of ESG compliance, Ares, Eurazeo, and Pemberton retained their positions as the most compliant lenders in the rankings, reflecting a growing importance of responsible investing among direct lenders.

Robust Deal Flow in 2024

The landscape for European direct lending remains both competitive and resilient. In fiscal year 2024, the market experienced a remarkable surge, with 937 deals completed—a 33% increase from the previous year, marking the highest transaction volume on record. This robust deal flow was primarily driven by add-ons, while private credit also faced stiff competition from larger syndicated markets.

Mid-Market Deal Popularity

Mid-market deals have continued to dominate, making up 75.5% of all transactions in 2024. The last quarter of the year was especially active, seeing 296 deals occur. This strong performance for direct lending is expected to pave the way for a promising 2025, across both debt-related activities and mergers and acquisitions.

Trends in Use of Proceeds

In 2024, bolt-on acquisitions emerged as the most common use of proceeds, accounting for 34.6% of transactions. Buyouts also saw significant year-on-year growth, with 304 deals compared to 224 in the previous year, comprising 32.4% of total activity. Additionally, refinancings made up 16.6% of the transactions.

Regional Activity and Market Focus

Geographically, the UK and Ireland took the lead, representing the largest market share for direct lending, with 31.5% of deals. France remained significant with 18.6%, while southern Europe edged out DACH for the third spot at 14.7%. This illustrates a strong preference for direct lending in these regions.

Structures and Borrower Trends

In terms of financial structuring, unitranche loans dominated, accounting for over 60% of completed facilities. Senior/stretched tranches followed, making up 23.2% of the market share, while other structures comprised a smaller share. Software-related borrowers dominated direct lending activities with 204 deals, followed by business services and healthcare issuers.

Pricing Trends and Economic Outlook

As the year closed, the average pricing on direct lending deals improved, tightening to an average of 523 basis points above the reference rate. Leverage also increased, peaking at 6.8x. With such dynamics, the outlook for the coming year remains positive.

About Octus

Founded in 2013, Octus, previously known as Reorg, is a vital data and intelligence provider for the leading buy-side firms, investment banks, and advisory entities worldwide. Combining deep expertise with advanced technology, Octus delivers critical insights that drive impactful decisions across financial markets.

Frequently Asked Questions

What is the significance of the 2024 European Direct Lender Rankings?

The rankings provide insights into the competitiveness and performance of leading direct lenders in Europe, showcasing market trends and lender activity.

Who ranked at the top of the 2024 rankings?

Ares secured first place in the Octus 2024 European Direct Lender Rankings, followed by Eurazeo and Goldman Sachs Private Credit.

What types of transactions are most common among direct lenders?

Bolt-on acquisitions and buyouts were the most common types of transactions, indicating a strong interest in expanding existing businesses.

How did the market perform in 2024 compared to 2023?

The market saw a significant increase in deal volume, with 937 deals completed in 2024, a 33% rise from the previous year.

What are unitranche loans and their importance?

Unitranche loans are debt instruments providing blended senior and subordinated debt, and they accounted for over 60% of transactions, highlighting their attractiveness for borrowers.

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