A further 182 European direct lending deals were recorded in the third quarter, having accelerated from the first half of the year, but still down around a third versus the same period in the record-setting years of 2022 and 2021. By volume, direct lending facilities so far this year have registered around half of the previous two years at just shy of EUR 12bn.

Considering how direct lending has fared amid the current macroeconomic environment, it clearly remains within its infamous ‘golden era’. Having very quickly risen in volume over the past few years, the asset class has accounted for a quarter of deals by issuance volume so far in 2023 across the public and private leveraged capital markets.

While demand for new facilities from the M&A market remains stifled, the public markets are competing fiercely with direct lenders amid the certainty of execution and availability of funds presented by the private credit market.

Now, a heady mix of recessionary markers and difficult fundraising environment leaves some question marks paving the road ahead. The past recessions have in fact been very positive for the direct lending market, having been enabled in its current form by the GFC and solidified during the coronavirus-induced recession, brief as it was. When the next recession crystallises it will likely be another defining moment for this nimble and resilient market.

In the European 9M23 rankings, Ares leads the overall table, having inked 43 deals and cornering an 11% share of the market. Eurazeo and Tikehau placed second and third with 29 and 26 deals, respectively.

A total of 22 of Ares’ deals registered as large-cap, leaving them also topping the large-cap rankings, followed by CVC in second with 15 deals and KKR Credit in third with 13.

Eurazeo pulled ahead in a close run mid-market rankings, having raised 20 deals. Ares came in second place with 19 deals, while Tikehau secured third with 18 deals.

In the small-cap rankings, Apera secured first place with 17 deals, while Investec Private Debt and Fiduciam came in second and third respectively, with 12 and 11 qualifying deals.