Italy a 'new frontier' for private credit; Carlyle debt fees hit record level

This fortnightly newsletter covers news from across the global private debt market.

Italy is considered a "new frontier" for private credit firms as the country's small businesses open up to outside investment, Reuters reported.

Growing competition across Europe and a reclamation of the region's syndicated loans market by traditional banks is widening the appeal of growth areas including Italy, the report said, citing Deloitte Analysis.

Alternative asset giant Ares Management Corp. completed three Italian deals worth between €50 million and €150 million in recent months. While increasing, competition in the Italian market is not as fierce as in the UK, France and Benelux, Reuters reported, quoting Tyrone Cooney, a partner at Ares Management Credit Group and in charge of France and southern Europe.

Midmarket firms are the typical target for private credit investors, and there are many such businesses in Italy, particularly in its industrial north. These businesses have increasingly opened up to private equity ownership as founders age.

The proportion of private equity deals financed by credit funds is expected to rise to 15.8% of the total in the second half, according to Deloitte, up from 10.5% in the first six months of 2024 and 8.6% in 2023.

DATA WATCH: Deal activity

The broadly syndicated loan market had a bumper first quarter with total issuance of €29.3 billion in Europe, the most since the second quarter of 2021, according to Deloitte's Private Debt Deal Tracker Summer 2024 Update. Other notable trends showed:

⮞ French deal activity dropped 57% quarter over quarter in the first three months of the year. France accounted for its lowest share of total deals since the last three months of 2021.

⮞ The UK accounted for 35% of total deals in the period, with 39 deals completed.

⮞ The relative proportion of deals rose to 16% in Germany, 12% in Benelux and 8% in the Nordic region.

Read more here.

EARNINGS SPOTLIGHT

– The Carlyle Group Inc. raised $5 billion in credit during the second quarter, while management fees in global credit and solutions posted double-digit growth year over year, hitting record levels.

– Apollo Global Management Inc. set a quarterly record for debt originations, reaching $52 billion during the second quarter. Its flat quarterly earnings missed expectations as a spike in fee revenue was offset by a drop in income from its retirement business.

– Schroders Capital reported net new business of £3 billion during the second quarter, of which £1.4 billion came from its private debt and credit alternatives platform. The asset manager saw continued demand from its clients for its securitized credit strategies owing to the high interest rate environment.

FUNDRAISING

– Ares Management Corp. closed its US Senior Direct Lending Fund on $34 billion. The fund is nearly double the size of its predecessor and will target middle market companies in North America.

– Channel Capital Advisors LLP launched an asset-backed private credit strategy called Corniche I. It will originate short-term, asset backed credit facilities to companies in the innovation economy.

– LGT Capital Partners Ltd. launched a semi-liquid, open ended private credit fund which aims to facilitate access to the asset class, Alternative Credit Investor reported. It invests in yield-orientated an opportunistic credit through both corporate and asset-backed strategies.

DEALS

– Chanel SA raised more than €700 million from a privately placed bond sale, Bloomberg News reported. Goldman Sachs Group Inc. and Société Générale SA arranged the debt, and the notes mature in 10 and 12 years.