European direct lending activity reaches record driven by add-ons and mid-market buyouts

LONDON: Octus (formerly Reorg), the leading provider of global credit intelligence and data, today announces the publication of its European Direct Lender Rankings for the full year 2024. The rankings data (known as league tables in the financial industry) rank European direct lenders across sector, region, debt range and ESG compliance.

Most Active Lenders

Ares secured first place in the Octus 2024 European Direct Lender Rankings with an impressive 84 deals and a 6.4 percent market share. The top tier was rounded by Eurazeo with 57 deals (4.3 percent market share) and Goldman Sachs Private Credit with 55 deals (4.2 percent market share). When considering non-corporate facilities (such as real estate), the trio also led the overall wider rankings for direct lenders with marginally adjusted market shares of 6.2, 4.2 and 4.1 percent, respectively.

Goldman Sachs Private Credit was the most active lender for deals over €250 million total debt quantum, completing 48 deals in 2024. Blackstone Credit came in second with 36 deals, while Arcmont, CVC Credit, and Park Square all ranked joint third with 28 deals for the period. For deals below €250 million (mid-market), Ares moved up to take the top spot, leading with 58 deals versus Eurazeo’s 55 deals. Barings Private Debt cemented its third-place position with 39 deals.

The top three firms in the ESG-compliant rankings – Ares, Eurazeo, and Pemberton – held their positions from the previous quarter.

Deal Flow

European direct lending has remained competitive and resilient despite evolving economic conditions and geopolitical instability in 2024. Deal activity in FY’24 totaled 937 deals — a 33 percent increase from last year (FY’23), the highest on record. Those deals were skewed toward add-ons and private credit faced increased competition from the broadly syndicated market. Mid-market deals remained the most popular debt range, accounting for 75.5 percent of total activity.

Deal flow picked up throughout the year with Q4 representing the most active quarter with 296 deals. The strong performance of direct lending during the second half of 2024 fuels optimism for a promising 2025, both in debt-related and M&A activities.

Bolt-on acquisitions were the most popular use of proceeds (34.6 percent share) in 2024. Close behind, buyouts, which recorded a substantial year-on-year increase in deal activity (304 deals in 2024 vs 224 deals in 2023), accounted for 32.4 percent of the total share. Refinancings (16.6 percent) rounded out the top three. The UK and Ireland region continued to be a favored destination for direct lenders in 2024, representing the market's largest share (31.5 percent, 295 deals). France (18.6 percent, 174 deals) remained in second, while southern Europe (14.7 percent, 138 deals) narrowly displaced DACH (14.6 percent, 137 deals) for the third spot.

Unitranche structures maintained their dominance, making up just over 60 percent of the facilities completed. Furthermore, senior/stretched tranches represented the second most popular structure worth 23.2 percent (236) of the instruments, while bond notes, payment-in-kind, mezzanine and other structures took portions of a small remainder (16.2 percent).

Software-related borrowers accounted for the largest portion of direct lending activity, with 204 deals in 2024. Business Services-related issuers also consolidated their position in second place with 145 deals, while healthcare and life sciences issuers took the third spot with 135 deals.

Average pricing on direct lending deals tightened quarter on quarter to an average of 523 bps above the reference rate in Q4’24, while leverage crept up to a high of 6.8x in the same period.

Octus subscribers may access the full report, Octus European Direct Lender Rankings, on the Octus platform. Non-subscribers may access the report summary on the Octus website.

About Octus

Founded in 2013, Octus, formerly Reorg, is the essential credit intelligence and data provider for the world’s leading buy side firms, investment banks, law firms and advisory firms. By surrounding unparalleled human expertise with proven technology, data and AI tools, Octus unlocks powerful truths that fuel decisive action across financial markets. Visit octus.com to learn how we deliver rigorously verified intelligence at speed and create a complete picture for professionals across the entire credit lifecycle. Follow Octus on LinkedIn and X.

Fonte: Business Wire