Non-bank lenders in Europe recorded 201 deals in the first three quarters of 2016, up 6% on the 190 deals for the same period in 2015, according to Deloitte’s Alternative Lender Deal Tracker.
In the third quarter alone, there were 20 such deals in the UK, and 47 in the rest of Europe.
Fenton Burgin, Head of UK Debt Advisory at Deloitte, said: “In 2017, we expect some global asset managers to refocus lending capital back to US markets with further interest rate rises anticipated and a stronger economic outlook than some European markets.
“However, many alternative investors already have funds committed to European strategies.
“Pressures on banks in Europe to deleverage their balance sheets either through the sale of non-performing portfolios or non-core asset sales should also deliver a boost in activity.”
Deloitte said it is estimated there were around 130 direct lending managers seeking to raise over $50 billion of new capital as at November 2016.
Burgin added: “Deal activity is now stronger in mainland Europe than the UK as borrowers there start to recognise the flexibility non-bank lenders can provide.
“The European debt markets are still flooded with an excess of liquidity, approximately €41 billion, which will keep things favourable for borrowers.”
Floris Hovingh, Head of Alternative Lender Coverage at Deloitte, said: “The discrepancy between the alternative lender markets in the UK and the rest of Europe is striking.
“Deal volumes were down by 21% vs prior year for the UK, as M&A activity was partly put on hold.
“However it is more than offset by the rapid growth elsewhere in Europe (up by 29%) as direct lenders continue their march across the continent.”
Deloitte’s Alternative Lender Deal Tracker compiles data and information from 50 alternative lenders.
The tracker covers 862 transactions dating from the fourth quarter of 2012 — mainly mid-market direct lending deals across Europe.