DENMARK Trends and Developments Contributed by: Morten Krogsgaard and Lennart Meyer Østenfjeld, Moalem Weitemeyer
have had to accept terms similar to their origi- nal agreements. Borrowers with multiple financing options have been able to leverage this in negotiations, using the availability of alternative funding sources to their advantage. This has allowed them to nego- tiate more favourable terms or to refinance via other channels when advantageous. The abil- ity to amend and extend existing facilities has provided flexibility and stability for borrowers, enabling them to navigate the uncertain market Domestic private equity funds have incorporated subscription facilities into their fund portfolios, leveraging uncalled capital commitments. How- ever, for funds of a certain vintage, this approach is no longer feasible. In other jurisdictions, net asset value (NAV) financing is utilised when undrawn investor commitments are low or when the fund’s invest- ment phase has concluded and NAV facilities have proven to be a strategic tool for investment funds, offering advantages such as: environment more effectively. Net Asset Value Financing • liquidity needs: NAV facilities can provide the necessary liquidity to distribute returns to investors, make additional investments or support the financial stability of distressed portfolio companies; and • gap filling: these facilities can fill the gap when financing at the portfolio company level does not yield the desired outcomes. Despite being on the radar for funds and lend- ers active in the Danish market, NAV financing still remains rare in the Danish market. However, the relevance of NAV financing may increase depending on the development of the M&A mar-
ket. As the market evolves, NAV financing could become a more prominent tool for Danish funds seeking to optimise their financial strategies and enhance their investment capabilities. Outlook At the time of writing, the outlook for the Dan- ish M&A market remains positive, supported by stable economic conditions, a favourable regu- latory environment and active participation from both domestic and international investors. Key sectors such as technology, healthcare, defence and renewable energy are expected to drive M&A activity in the coming period. The outlook for club deals and syndicated loans in Denmark remains cautiously optimistic. As the M&A market continues to recover, the demand for larger-scale financing solutions is expected to grow. The ability of private debt, clubs and the broadly syndicated market to provide substantial capital and spread risk makes them a valuable tool for companies looking to undertake signifi- cant acquisitions or complex financing projects. However, global economic and political uncer- tainties and evolving trade restrictions and sanc- tions may pose challenges. M&A and leveraged buyout financing opportunities will determine the activity in the Danish acquisition finance market. The optimistic sentiments at the end of 2024 are still predominant but due to increased interna- tional uncertainty and market volatility at the start of 2025 there is an expectation that activ- ity pick-up will be delayed. The increasing alignment on valuation between buyer and seller experienced recently is fragile and is adversely affected by uncertainty on the domestic and international markets.
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