FINLAND Law and Practice Contributed by: Timo Lehtimäki, Niklas Thibblin, Essi Hietaoja and Oona Honkamaa, Waselius
Waselius Eteläesplanadi 24 A 00130 Helsinki Finland Tel: +358 9 668 9520 Fax: +358 9 668 95 222 Email: info@waselius.fi Web: www.waselius.fi
1. Private Credit Overview 1.1 Private Credit Market
financing to private credit funds and their inves - tors. Additionally, an increasing number of banks are partnering with asset managers to enter the private credit market through various business models. Despite this, banks remain the most promi - nent lenders in the Finnish market. Also, certain Finnish banks have stepped up and are offering super-senior revolving credit facilities to private credit borrowers – which entails that the private credit documentation (in particular, the facil - ity agreement and the intercreditor agreement) need to be drafted to accommodate this. 1.3 Acquisition Finance Private credit funds have been significant lenders in Europe and in Finland in the last 12 months, and the preferred lender in sponsor-backed acquisition financings, in particular. 1.4 Challenges There have not been any significant regulatory obstacles or challenges to the expansion of the private credit market in Finland. However, many private credit funds lending into Finland still face the situation of performing their first deal in Fin - land, which necessitates a quick learning curve regarding (for example) the types of security
The shift in the global loan market from tradi - tional bank lending towards private credit has affected the popularity of private credit in the Finnish market as well, and more and more credit funds are also targeting Finland. Economic con - ditions and uncertainty, as well as the tightening capital and regulatory restrictions on traditional banks, have made way for the rapid expansion of direct lenders in recent years, and have led to an increase in the availability of private credit compared to bank financing. In addition, the increased regulatory require - ments have led to banks becoming more risk- averse. Bank lending may again become more attractive to borrowers due to the falling interest rates; it is, however, still likely that the demand for private credit will continue to grow. 1.2 Interaction With Public Markets Competition between banks and private cred - it funds has increased, with the private credit market gaining market share at the expense of public debt markets over the last six months. However, banks have played a key role in the growth of the private credit market by providing
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