“The UK market feels a lot more seasonal now than it used to,” one lender said. “The past few quarters have had these quick spikes of activity, but that’s being met with a lot of downtime in between.”

A flurry of deals have rounded out in recent weeks — as 9fin’s turbo-charged private credit coverage shows. But UK lenders are starting to feel more akin to their continental counterparts.

France is notorious for its August shutdown, during which you may struggle to get an email response from Paris for weeks. In the Nordics, much of June and July are reserved for making the most of the fleeting Scandi summer, leaving deal processes on hold.

“Everything in our pipeline cleared up in early July,” a UK fund manager said. “You don't have much choice nowadays but to keep things ticking over with portfolio work till September.”

What gives? Higher competition in mid-to-large-caps (a topic we have explored extensively here and here) is certainly a driving factor.

The competitive pressure necessitates more strategic timing to launch and wrap up deals, sources said, and sellers are more focused on taking advantage of optimal market conditions.

As a result, letting a process run into the slower summer period may seem like less of an option than in previous years.

Crunching the numbers — H1 report

Our H1 European Private Credit Review went live at the start of this week, providing 9fin subscribers with a wealth of data-based insights into the state of the market.

Key takeaways include the uptick in deal activity in Q2 compared to Q1 and the relative recovery of median spreads.

But while the total number of private credit deals rose 22% from the previous quarter, average deal size (€171m) has consistently been in decline since a Q3 23 peak of €254m.

That’s not to say there haven’t been several jumbo financings this far into 2024 — Ardonagh’s $3.3bn refinancing and, more recently, SumUp’s €1.5bn loan spring to mind — but for the most part, these have been refinancings. Large-cap direct lenders have prioritised defending existing positions from syndicated markets, rather than expanding market share.

Marketeers in mid-to-large-caps have certainly seen margins tighten on deals this year. But Q2 data suggests that strain is beginning to ease, with median spreads rising from 562bps in Q1 to 625bps last quarter.

Given the declining average size of private credit deals, this highlights the syndicated market’s consolidation of more large-cap deals, while private credit returns to more traditional mid-market financing.

Click here to check out further insights and visualisations from the review, and read our deal count rankings in full.

European private credit pipeline

As mentioned, this week several upper-mid-market processes closed out in Europe, especially in the UK.

Carlyle and CVC were part of a club of lenders providing a £575m financing package for KKR’s acquisition of festival organiser Superstruct, with the full deal terms reported on here.

Another club, led by Apollo and HPS, struck a £300m deal to finance Aquiline’s buyout of KPMG’s carved out pension advisory practice, Isio, as reported.

9fin also provided updates on a variety of ongoing processes, including the recently launched sale of Irish software firm AMCS Group, first round bids for insurance broker DR&P, and an £100m debt raise for private school operator Dukes Education, among others.

For the full run down on all the in-market deals in our pipeline, please email subscriptions@9fin.com.

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