DENMARK Trends and Developments Contributed by: Morten Krogsgaard and Lennart Meyer Østenfjeld, Moalem Weitemeyer
needs of each transaction. This flexibility is particularly valuable in complex deals where traditional lending may fall short; and • leveraging relationships: private debt provid- ers often have strong relationships with bor- rowers, allowing them to offer more person- alised and responsive financing options. This relationship-driven approach can be a key differentiator in competitive markets. Private debt has proven particularly relevant for assets where traditional lending appetite has been limited for distinct reasons. This includes situations where the risk profile of the asset does not align with traditional lenders’ criteria or where the speed and flexibility of private debt are required to close the deal. For example: • cross-border providers: the footprint of private debt, especially from cross-border providers, is expected to continue growing. These providers bring additional capital and expertise, further enhancing the market’s abil- ity to finance acquisitions; and • exploring new market areas: it remains to be seen whether private debt providers will explore new market areas, such as financ- ing working capital. This expansion could challenge traditional lending and offer new opportunities for borrowers seeking flexible financing solutions. The private debt market for Danish transactions is primarily driven out of London, with Danish private debt providers being small players even in the domestic market. It is still unclear how banks will attempt to regain market share. They may choose to mirror the offerings of direct lend- ers, providing similar flexibility and customisa- tion. Alternatively, banks might team up with pri- vate debt providers to offer combined solutions
that leverage the strengths of both traditional and private debt financing. For example: • mirroring direct lenders: banks could be forced to adopt strategies similar to those of private debt providers, offering more flexible and tailored financing options to compete effectively. This may clash with the strict com- pliance requirements on bank credit policies and credit approvals imposed by the Dan- ish Financial Services Authority, a limitation which is not imposed on private debt provid- ers; and • collaborative approaches: teaming up with private debt providers could create mutu- ally beneficial partnerships, combining the stability and resources of traditional banks with the agility and customisation of private debt, even if this means an overall reduction in the banks’ commitment compared to a full traditional leveraged finance package. Overall, the role of private debt in acquisition finance is expected to remain significant, with potential growth in new areas and evolving strat- egies from traditional lenders to compete and collaborate. Amend and Extend/Refinancing Awaiting an improving M&A deal market, certain borrowers have taken the opportunity or been required to amend and extend existing facilities, contributing to a large part of the overall financ- ing transactions in 2024. This trend has been driven by the need to manage existing debt obli- gations amidst uncertain market conditions and to position the borrowers favourably for future opportunities. However, there has been no clear tendency as to whether borrowers have been able to obtain improved terms. The outcomes of these negotiations have varied, with some borrowers securing better terms while others
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