Direct Lenders Pursuing Opportunities Among European Businesses

European businesses have new options for securing loans.

For example, Fidelity International is expanding into European business lending with a new fund that will make secured loans to midsized businesses on the continent, the Financial Times (FT) reported Sunday (June 18).

That move comes shortly after asset manager BlackRock acquired private debt business Kreos Capital, a provider of loans to startups and technology companies, according to the report.

The past few months also saw private credit acquisitions made by asset managers Nuveen and PGIM. These companies aim to serve the demand for private credit in Europe at a time when it has become more difficult to get loans from banks, per the report.

The collapse of Silicon Valley Bank and the UBS takeover of Credit Suisse added pressure to bank lending that had already felt a long-lasting impact from the 2008 financial crisis, according to the report.

Banks’ pullback from certain sorts of lending has created an opening for direct lenders who see an opportunity for a steady income stream, growing returns and transaction fees, the report said.

When announcing its acquisition of Kreos Capital on June 8, BlackRock said the move boosts its position as a leading global credit asset manager, enables it to provide a diverse range of private market investment products and solutions, and complements its Global Credit business.

“The Kreos team has built a world class investment process and delivered for clients through multiple cycles,” James Keenan, chief information officer and global head of BlackRock Private Credit, said in a June 8 press release. “Coupled with our expectation that growth and venture lending will figure prominently in the expansion of the global direct lending opportunity set going forward, we believe this is an opportune time to welcome the Kreos team to BlackRock.”

In related news, a generation of FinTech lenders across the Europe, Middle East and Africa (EMEA) region are shaking up the way small and medium-sized businesses (SMBs) access finance.

Demand for their services surged earlier this year, with several FinTech lenders announcing additional fundraising rounds to help grow their respective SMB lending platforms and meet the demand for alternative financing solutions.