The panel featured Didier Beltai-Menth, Acquisition & Leveraged Finance of BayernLB; Adrian Cremer, Director of the Leveraged Finance Group of Société Générale; Paul H. F. Kim, Managing Partner in Financial Sponsor Debt Advisory of Herter & Co.; Dr. Nicolaus Loos, Co-founder, CEO and CIO of Deutsche Credit Capital Partners; Jurij Puth, Managing Director of GSO Capital Partners and Dr. Oliver Hahnelt, partner at McDermott Will & Emery.
The panel gave an overview of the German LBO market, including finance surrounding the M&A transactions, the increased market shares of debt funds and the unique debt fund auctions.
A main discussion point was the driving factors for debt funds. Most of the German is already covered in debt funds since last year. Whilst those debt funds wish to support a more efficient market in which convenience is worth a cash return, banks remain very competitive against funds.
Competition between funds and banks has increased in the mid-market sector, especially in software and tech, as they have drastically increased in value to be amongst the most popular sectors. While it is important to hear a bank’s, as well as a fund’s, perspective, it is currently still much more difficult for a fund to compete, as banks can afford to be very aggressive in their terms. Banks have no real incentive to fund fast solutions. Between bank and fund debt management, both approaches still bring different structures and may shift the market differently.
Furthermore, the panellists were asked to discuss their individual predictions on competition in the LBO market. While some predicted no change and no financial crisis in the next year, others saw large gaps in the market already existing as well as to come in the future, which may provide new capital structures.
Dr. Oliver Hahnelt,
McDermott Will & Emery