GERMANY Law and Practice Contributed by: Michael Josenhans, Lucas Lengersdorf and Beatrice Zobel, Freshfields
1. Private Credit Overview 1.1 Private Credit Market
Q2 2025. Notably, borrowers (primarily corporates) in Germany are still exploring public debt options in light of decreasing interest rates and other historical dependencies on classic lending structures (see also below). Pricing Trends All-in yield for private credit products as of Q2 2025 has further decreased to 9.94% as per the Private Per - forming Credit Index (PPCI). For reference, this level currently lies 353 basis points higher than the yields on the European Leveraged Loan Index. While this still shows a significant gap, this trend once again high - lights that pricing for private credit financings contin - ues to tighten, and offers – in particular in certain parts of the market – a real alternative to classic syndicated loan products. 1.3 Acquisition Finance Private credit has played a significant role in acqui - sition financing in Germany, particularly for private equity-sponsored deals. However, it has not been an uncontested preference, as public markets and bank financing have remained strong competitors. Market Share of Private Credit v Banks In Germany, private credit funds have been able to defend their market share relative to banks. In 2025 so far, debt funds financed around 66% of completed mid-cap transactions, compared to 34% financed by banks. Financing Purpose and Acquisition Trends As in 2024, add-on acquisitions and leveraged buy - outs (LBOs) have been a significant driver of private credit activity in Germany. Add-ons have remained a substantial part of German deals throughout 2025 to date. The share of new LBO financings remained steady on a lower level, with market participants see - ing a resurgence of M&A activity in the second half of 2025. Competitive Pressure from Banks and Public Markets Despite private credit’s flexibility, public debt mar - kets and banks have been strong alternatives. For instance, refinancing activity has increasingly moved towards syndicated loans due to pricing advantages.
The German private credit market in 2025 has been mostly steady, being anchored by a continuous flow of deals from the private equity space, a recovering IPO window and accelerated secondaries fundrais - ing activity. Despite this trend, LBO activity at the beginning of 2025 was slower than anticipated, with refinancings dominating financing activity, accom - panied by add-on acquisitions and dividend recap transactions. Compared to 2024, the deal count for private equity-backed transactions YTD in Q3 of 2025 in Germany is up by approximately 12%. Germany continues to lead deal activity in the broader European market (amongst France and the UK), making up 46% of the market by deal count. Impact of Political and Economic Conditions Despite ongoing macroeconomic uncertainty, 2025 so far has once again been characterised by a tighten - ing of spreads for private credit financings. This has led to continuing lender competition, which has itself resulted in significant margin-saving opportunities in the repricing and refinancing space as well as broadly borrower-friendly market conditions. As was also the case in 2024, private credit is still in persistent com - petition with the syndicated loan market. Key Sectors of Activity Significant private credit activity in Germany over the past year has been concentrated in a few key industries. Prominent sectors include technology and software, services, insurance, healthcare and life sci - ences, and, to a lesser degree, manufacturing, all of which have continued to drive deal volumes. Notable transactions in Germany involved companies such as Techem and Amprion, while the IPO of Ottobock showcased the involvement of a private credit financ - ing at shareholder level through the whole lifecycle and even post-IPO. 1.2 Interaction With Public Markets Competition Between Public Debt Markets and Private Credit in Germany Through 2025, debt funds were able to defend their increasing market share, with private debt making up approximately 66% of relevant transactions as of
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