GERMANY Law and Practice Contributed by: Michael Josenhans, Lucas Lengersdorf and Karl Kuhn, Freshfields
Freshfields Bockenheimer Anlage 44 60322 Frankfurt am Main Germany Tel: +49 6927 308 340 Fax: +49 6923 2664 Email: michael.josenhans@freshfields.com Web: www.freshfields.com
1. Private Credit Overview 1.1 Private Credit Market
savings of up to 200 basis points for borrowers. The persistence of geopolitical instability across Europe, coupled with the strong presence of the regionally structured German banking system, has added to the cautious sentiment within Germany’s private credit landscape. Therefore, apart from restructuring situations, private debt deal activity in the German market has not devel - oped as dynamically as in other European juris - dictions. 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 sciences, and, to a lesser degree, manufacturing, all of which have con - tinued to drive deal volumes. Notable transac - tions in Germany involved companies such as SumUp, Envalior, Permira/GGW and Ottobock, showcasing private capital providers’ interest in resilient and innovative businesses across the technology and industrial sectors.
The German private credit market has dem - onstrated mixed performance over the last 12 months amid broader economic and political challenges. In the first half of 2024, private credit deal activity in Germany showed resilience, aligning with overall European trends that saw a recovery in Q2 after a weaker Q1. This upward movement reflected improved deal volumes, especially in refinancings and bolt-on acquisi - tions. The second half of 2024 has seen a slow - ing down of activity and a shift towards rescue financings. Impact of Political and Economic Conditions Germany’s private credit market performance has been shaped by a complex economic back - drop. Inflationary pressures, combined with slower-than-anticipated interest rate cuts, have contributed to uncertainty, but the M&A market for German mid-cap deals has slowly begun to adapt to the increased interest rate environment and rising energy prices. While public markets have recovered, competing directly with private credit, notable refinancings of private debt into syndicated loans have occurred, with margin
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