Non-bank lending hits new record in Europe

According to research from business advisory and accountancy firm Deloitte, alternative non-bank lenders recorded an increase in deals in the UK and Europe during the Q3 of 2014. Non-bank lenders carried out 73 deals in the UK and Europe in the Q3, compared with 35 deals recorded in the same period last year.

The firm said the volume – which spanned private equity and mergers and acquisitions – had reached its highest level since it began its alternative lender deal tracker in the Q4 of 2012.

Furthermore, Deloitte estimates European direct lending funds are currently sitting on EUR 50 billion of committed capital – including invested and uncalled capital – while more funds are attempting to raise a further EUR 15 billion over the next year.

The market for alternative lending has gained momentum in recent years as traditional bank lenders have de-levered, creating a significant gap in the market.

Fenton Burgin, head of UK debt advisory at Deloitte argued that “The outlook for alternative lenders is strong for 2015, based on significant capital raised this year” and added that “Other factors such as changing investor appetite in a low-yield environment and the improving economic activity in the UK and US economies will only boost this activity. Traditional lenders still face the challenge of capital shortfalls and increased regulatory demands on the allocation of what bank capital there is.”

Additionally, he said that alternative lenders are also moving into continental Europe, with dedicated origination teams now in local European countries.