Ares tops European direct lender rankings
Global alternative investment manager Ares has ranked first place in Debtwire’s 2023 European Direct Lender Rankings table, having signed 62 deals to secure a nine per cent share of the market.
Second position in the ranking was a three-way tie between Eurazeo, Tikehau IM, and Goldman Sachs Private Capital with 37 deals apiece and a consequently a 5.62 per cent share.
In the large-cap ranking, Goldman Sachs tied with Ares’ 33 deals, giving each a 20 per cent market share. CVC came third with 18 deals inked in 2023, equating to a 10.65 per cent share.
Barings came top of the mid-market rankings with 30 deals, followed closely by Ares’ 28 qualifying deals. Eurazeo placed third with 26 signed deals.
In the small-cap rankings, Fiduciam placed first with 31 deals, while Apera and Investec Private Debt came in second and third, respectively, with 24 and 14 deals.
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The healthcare sector came top for direct lending volume in 2023, with €10.7bn (£9.1bn). This was followed by services/business services with €10.1bn and computer-related industries in third position with €9.5bn.
Overall direct lenders saw deals decline by 20 per cent in 2023, with a total of 660 across the year.
Debtwire’s data revealed that the fourth quarter of the year saw the greatest activity, with both the highest number of deals and the largest volume of transactions.
Despite the overall decline compared to 2022, direct lending maintained a market share of 30 per cent versus institutional loans and high yield bond activity, which was down from an almost 40 per cent share in 2022.
Debtwire said this further cemented the asset class as a mainstay of the leveraged capital market.
Read more: Direct lending returns will “more than offset” higher defaults this year
Total 2023 direct lending deal volume reached just more than €60bn, which Debtwire cites as down to a severe lack of new money activity stemming from a weak auction pipeline.
However, the volume of realised auctions processes picked up in the fourth quarter of 2023, suggesting a brighter outlook for the leveraged debt market in 2024.
Debtwire argues this may lead to direct lenders facing a new challenge over the coming year. Over the past two years, significant syndication risk and a narrowing price gap had encouraged issuers to raise debt in the private credit market. However, as this risk reduces, lenders will face tighter margins with the inherent risk premium attached to private credit.
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