EMEA Private Credit Review: June 29

✨ Summary by AI at Octus

Editor’s Note: This weekly report encapsulates market information, data and commentary relevant to private debt investors and professionals in Europe. We include a curation of Octus’ proprietary journalism, with links to unverified third-party press reports and primary sources. For access to our deal origination pipeline of private credit and M&A transactions, click HERE.

Editor’s Note: This weekly report encapsulates market information, data and commentary relevant to private debt investors and professionals in Europe. We include a curation of Octus’ proprietary journalism, with links to unverified third-party press reports and primary sources. For access to our deal origination pipeline of private credit and M&A transactions, click HERE.

Private credit giant Apollo set a goal last year to invest $100 billion into Germany over the next decade. Last week, Apollo’s Florian Feder gave attendees of Octus’ Frankfurt Forum a sneak peek of where some of that capital would be deployed.
 

Florian Feder

The key areas highlighted were energy infrastructure, defense and sports, which Apollo will invest in via private equity, credit and hybrid capital strategies.

Additionally, details of a partnership between Apollo and Commerzbank were discussed, both in the keynote and on a later panel on private credit in the DACH market.
 

Oscar Laurikka, Paul Kim, Alexander Schroeder, Aileen Haller, Christian McCarty

Commerzbank’s head of leveraged finance Alexander Schroeder explained how the partnership will mirror the one that the bank already has with StepStone: “We asked what really makes the direct lenders so competitive for our [sponsor] clients. It’s the ability to underwrite the entire hold from one hand – without market risk, without complexity, without additional cost. Our goal was to write larger holds out of one hand, with a single credit decision and bank pricing.”

“By the end of 2023 we reached an agreement with StepStone and we were managing our own first private credit fund out of one hand. Despite good dealflow and strong deployment, we recognized that larger holds could attract more attention, which is why we approached Apollo. We’ve now built on the StepStone format, and we have the ability to provide holds north of a hundred million, almost like a small unitranche” he added.
 

Paul Kim, Alexander Schroeder

Bank and direct lender partnerships have become an increasingly important feature of the European and German market in recent years. FSN’s Christian McCarty sees this as a positive: “In general we see these developing collaborations between funds and banks as quite positive. There are benefits for all sides. Funds benefit from the origination efforts from the banks, and the banks – usually constrained on their hold sizes – can now provide a more holistic solution. And from the sponsor perspective, it’s also beneficial to talk to fewer parties to put together a financing solution, more or less out of one hand.”
 

Aileen Haller, Christian McCarty

But Ares’ Aileen Haller offered words of caution stemming from the experience of its former partnership with GE Capital. “In the early days of our European direct lending business, we partnered with a bank as we looked to scale our business at speed. Over time, though, it became clear there wasn’t always perfect alignment between the parties, which made deal execution sometimes challenging,” said Haller. She added “that was a different time and while we aren’t actively looking to partner with a bank for origination purposes – given the strength and depth of our own capabilities – we still talk to them about ways in which we can partner together to service our clients because we fundamentally do different things at this point.”

The question was then raised about whether bank and direct lender partnerships have a competitive edge on certain processes because they are able to speak for the entire debt package, including RCF and guarantee facilities. Teneo’s Paul Kim weighed in from the advisory perspective: “It’s part of our mandate as a debt advisor to take care of the super senior and RCF on direct lending deals, and to know the right partners for that,” he said.
 

Paul Kim

“Yes, it’s easier to have a solution where everything is already done from the get-go, but you also have the option of going out yourself and potentially getting better terms on that [super senior]. We’ve done deals with all of these partnerships except the Apollo one, and they hold up very competitively on the right deals. But the complete-solution piece is a nice-to-have. It doesn’t drive the main decision on the direct lending fund.”
 

Ares is providing the debt that is supporting Rivean Capital’s acquisition of a majority stake in Belgian air filtration specialist Deltrian International.

CVC has led a refinancing and add-on for Ufenau’s Kanalservice Gruppe.

Goldman Sachs Private Credit is providing a €200 million PIK facility as part of a financing package for CVC’s acquisition of Italian sweet ingredients maker Irca.

Kartesia has provided financing to support Dutch private equity firm NLI Capital in the acquisition of Holland ICT Groep.
 

Main Capital announced a €5.25 billion fundraise across two vehicles.

Anacap closed its second buyout fund at €320 million.
 

H.I.G. Capital has appointed ProA’s Carlos Couret as head of the lower middle market PE team in Spain.