Banks and debt funds financed a triple-digit number of transactions for the first time
Munich, Frankfurt, Zurich, 25 January 2018. The German mid-cap LBO market experienced another year of significant growth in 2017. The latest MidCapMonitor prepared by the investment bank GCA Altium that regularly analyses leveraged buyout finance transactions with a credit volume of between EUR 20 million and 500 million recorded 100 transactions for the entire year of 2017. This represents a rise of 30% compared with the previous year.
The growth was fuelled in particular by debt funds, which produced a gain of 166% with 32 transactions. Generating 68 transactions, banks financed just three more deals than they did in the previous year (a slight gain of just 5%).
In 2016, banks made life in the German mid-cap LBO market particularly hard for debt funds with very aggressive structures. The debt funds have responded and sharply reduced their average interest margin rates by including favourable first ranking senior tranches held by banks. "More than 40% of the transactions financed by debt funds were set up as first-out / second-out structures," Johannes Schmittat, Managing Director of the Frankfurt office of GCA Altium, said in describing the development. By taking this approach, debt funds were able to significantly increase their market share to 32% in 2017 (compared with 16% in the previous year).
Among banks, SEB defended the 12-month market-leadership position it achieved in 2016. But it had to share this position with Unicredit, the most active bank in the market during the fourth quarter. "Both banks successfully completed 23 transactions each," said Norbert Schmitz, another Managing Director at GCA Altium. Five other banks financed more than 10 LBO transactions each: IKB (19), Commerzbank (17), NIBC (14), DZ Bank (11) and ING (11). "Despite this impressive performance, we think banks will have a very hard time in the future when they try to regain market share lost to debt funds," Schmitz said.
In the second half of 2017, banks provided new LBO financing for such companies as Bien-Zenker/Hanse Haus, AVS, svt, DefShop and proALPHA. Recaps and refinancings were provided to ATESTEO, Sport Group, COMCAVE.COLLEGE and Schleich, among others.
The entire European market for unitranche finance provided by debt funds also set a record in 2017 with a total of 179 transactions, generating a gain of more than 75% compared with the previous year. In addition to Germany with 32 transactions, unitranches were also extensively used in the UK (70 transactions), France (42) and the Benelux countries (12).
About GCA Altium
GCA Altium is the European division of GCA. The global investment bank offers growth companies a broad portfolio of services around M&A, debt, public and private finance as well as advice on restructuring matters. GCA is listed on the Tokyo stock exchange (TSE: 2174) and has extensive expertise in technology and telecommunications, media, digital media and communications, consumer and retail, healthcare, industrial technologies, financial markets and business services. GCA has expert teams in Frankfurt, London, Manchester, Milan, Mumbai, Munich, New York, Osaka, San Francisco, Shanghai, Singapore, Tel Aviv, Tokyo and Zurich. GCA Altium regularly compiles the GCA Altium MidCapMonitor overview of leveraged transactions in Germany to boost the transparency of the German mid-cap LBO market.
Further information: http://www.gcaaltium.com
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