UK financing market buoyant amid private equity recap trend

Michael Bow
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UK LOAN market volumes have almost doubled since last year, figures out today reveal, driven by a Europe-wide trend for private equity firms refinancing their investments.

The €4.5bn (£3.8bn) of loans made in the three months ending September helped take the total volume of loans made this year to €11.9bn, up from the €5.5bn in the same period last year.

The research, by Marlborough Partners, also shows the amount of money lent out to private firms to do so-called dividend recaps has reached 49 per cent of total loan volumes, higher than the 46 per cent lent out to fund buyouts.

It is the first time ever that the volume of recapitalisation cash has surpassed money lent to fuel buyouts, underscoring the trend to extract cash from portfolio firms by means other than an outright sale.

“Although dividend recapitalisations attracted negative publicity in the run up to the financial crisis, most of the companies now recapitalising have survived the most difficult three or four years that many have ever experienced and will therefore be pretty robust businesses, capable of servicing higher levels of debt,” Marlborough Partner Markus Ehrler said.