BELGIUM Trends and Developments Contributed by: Wim Aerts, Dorothée Vermeiren and Stijn Van Walleghem, Clifford Chance
Clifford Chance Avenue Louise 149 1050 Brussels Belgium
Tel: +32 5 533 59 11 Fax: +32 5 533 59 59 Web: www.cliffordchance.com/people_and_places/ offices/brussels.html
Growth of Private Credit The private credit market is on a growth trajec - tory in Belgium and has seen remarkable growth in the Benelux as a whole. After only a decade of existence, the private credit market now accounts for almost 80% of leveraged finance transactions in the Benelux, according to the Houlihan Lokey mid-market monitor. Following the global financial crisis, banks became subject to stricter regulations, which forced them to take a more conservative approach to lending, mean - ing that borrowers needed alternatives. Private credit providers, which are not subject to the same strict regulations, provided an alternative. In Belgium, acquisition financing has historical - ly been dominated by the strong local banking sector and it was not until sponsors were com - fortable with the higher leverage and the ability of private credit providers to provide incremental debt for M&A activity and other investments, and competitive dynamics reducing the pricing dif - ference between bank lending and private credit, that the private credit market started growing significantly. A large number of private credit providers is or has been active in the Benelux. Some of them have a local presence and some do not. Almost
all of them (if not all of them) look at the Ben - elux as one market in the sense that the same team covers each of the relevant jurisdictions within the Benelux. Belgium and the Netherlands are relatively obvious choices for private credit providers wanting to roll out European capital deployment given the sophisticated and cred - itor-friendly legal systems in both jurisdictions, which do not involve prohibitive transaction costs or regulatory restrictions. Terms for private credit transactions in Belgium and the Netherlands are not hugely different from terms for private credit transactions in the UK, and differences between terms are more reflec - tive of the size of the transaction, the sector in which the borrower operates and the competi - tion between private credit providers. The private credit market in Belgium and the Netherlands is part of a larger international market. A McKinsey study suggests that the size of the private credit market in the US alone could grow to more than USD30 trillion, from approximately USD2 trillion at the end of 2023.
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