NETHERLANDS Law and Practice Contributed by: Gianluca Kreuze, Ruben den Hollander, Anne van Geen and Sanne van Esterik, Loyens & Loeff
Loyens & Loeff N.V. Parnassusweg 300 1081 LC Amsterdam The Netherlands Tel: +31 20 578 57 85 Fax: +31 20 578 58 00 Email: info@loyensloeff.com Web: www.loyensloeff.com
1. Market 1.1 Major Lender-Side Players Market Players
exit. Direct lenders typically operate outside the scope of EU banking supervision, affording them exemption from regulatory pressure. As this trend of the increasing market share of direct lenders is developing over the years, we see direct lenders exploring new market areas, such as the financing of working capital (includ- ing asset based lending), financing of (stretched) senior solutions (rather than unitranche), financ- ing based on recurring revenue as opposed to EBITDA and financing of smaller–sized pri- vate equity transactions (ie, companies with an EBITDA around EUR10 million or less). As such, traditional bank-led leveraged loan financing is no longer the predominant source for funding private equity transactions in the Netherlands. Impact of Types of Investors Different types of investors have different pref- erences, risk appetites and business models that impact the negotiation and structuring of loan agreements. Compared to direct lenders, commercial banks often impose more traditional and conservative covenants and financial ratios to mitigate their risk. On the other hand, direct lenders, often seeking higher yields, are comfort- able with a higher debt quantum and are willing to offer more flexible structures and documen- tary terms, such as fewer interim repayment
The Dutch acquisition finance market is tra- ditionally divided into three market segments based on debt quantum, being: • small (up to approximately EUR30 million) – often lent by traditional (Dutch) commercial banks and on a bilateral basis (and increas- ingly by a direct lender); • medium (from approximately EUR30 million up to approximately EUR250 million) – often lent by a direct lender or a club of (Dutch) commercial banks; and • large (in excess of EUR250 million) – often lent by larger syndicates consisting of ((non-) Dutch) commercial banks (or direct lenders). Over the last few years, the Dutch acquisition finance market has become crowded in terms of the number of debt providers active in the small, medium and large financing space. Even though traditional commercial banks are still active, direct lenders (often private credit funds) have grown their market share in the Nether- lands. New direct lenders are still entering the Dutch debt market, but there have also been the occasional direct lenders that have decided to
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