Momentum behind European unitranche deals held firm in the third quarter driven by Benelux region, with debt funds maintaining their dominant position in the market, according to new data from investment bank Houlihan Lokey.
The advisory firm’s latest MidCapMonitor report shows 135 unitranche deals closed in the third quarter of 2025, bringing the year-to-date total to 394 transactions, a 17 per cent year-on-year increase.
Benelux significantly outperformed other regions, with completed unitranche deals rising 59 per cent in the third quarter, Houlihan Lokey said.
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Debt funds executed 54 new financing deals during the quarter, accounting for 40 per cent of activity, up from 41 in the second quarter. Add-on acquisitions made up 45 deals (34 per cent), while refinancings and dividend recaps totalled 36 transactions (27 per cent).
“Debt funds are well capitalised and ready to support compelling opportunities,” said Patrick Schoennagel, managing director and co-head of capital solutions in Europe. “As clarity continues to improve and sponsors work through pent-up pipelines, we expect a continued uptick in merger and acquisitions (M&A) and overall unitranche activity, underpinned by resilient sectors and well-structured transactions.”
By contrast to Benelux, activity in the UK, France and Germany remained robust but fell quarter on quarter by 23 per cent, 10 per cent and five per cent respectively.
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“While certain regions experienced pockets of softness, the underlying momentum continues to be supported by healthier M&A pipelines, evidenced by the notable rise in new financing transactions during the quarter,” said Thorsten Weber, managing director and head of sponsor finance, DACH, in Houlihan Lokey’s capital solutions group. “Debt funds remained highly active and competitive, offering attractive leverage and pricing while maintaining strict discipline around asset quality and credit fundamentals.”
Despite quarterly volatility, debt funds have retained a lead position year-to-date position, representing 68 per cent of deals in the UK, 61 per cent in Germany, 53 per cent in Italy and 79 per cent in Benelux.
The report also noted that banks staged a comeback in the third quarter, accounting for 50 per cent of completed deals after a weaker start to the year in Germany, though Houlihan Lokey stressed that debt funds “still hold the lead”.
