Pan-European Private Placement market taking shape

The Pan-European private placement (PP) market is no doubt becoming a reality. With the progressing attempts to compile a series of standardised documentation and ongoing talks about some common regulations, the vision to create one single market for Europe is not only on a good path, but also on the way to joining mainstream corporate finance.

One of the reasons why Europe finally let private placements to enter the market is the need for an alternative finance option. It is not only France, Germany and the United Kingdom anymore, but also other European countries which can finally see the benefits of PP. For example in Italy, companies can borrow via unlisted bonds of insurance companies and other non-banking institutions. The overall trend in Europe is similar – borrowing more from alternative sources and less from the capital market and banks.

Building up on the U.S. experience, where the investments exceeded USD 50 bn per year in the past two years, Europe does not only allow PP to be present on the market but also gives it more credibility and trust. European decision-makers are clearly more keen on experimenting with the ratios of funding sources, trying to find the most suitable balance for individual business plans. The pick 'n' mix approach is gaining more success and it is not a stretch to say that some very cautious attempts are turning into more courageous plans with real potential.

The reasons why it is viable to have a single pan-European PP market are starting to fill out a peoper list. However, there are many items on the list of requirements to be ticked off before it can be adopted and accepted by the majority of the players on the financial market. Transparency & relative predictability of transaction costs, expectable processes, complete and fully recognised standardised documentation, appropriate tax adjustments, common structure and many other question marks are still hanging in the air even though some of these issues have already started to be solved. As mentioned above – earlier this year, the Loan Market Association in cooperation with several other actors from the financial sector came up with a suite of standardised template documents and the UK government touched on the question of withholding tax exception for qualifying private placements.

Pan-European private placements are taking shape. Nevertheless, there are many topics which need to be thoroughly discussed. One of the most singular opportunities to move things forward is the Private Placements Forum, which is taking place on 22 April 2015 in Steigenberger Airport Hotel Frankfurt, Germany. It will host high-ranking, experienced professionals who have a lot to share and some inspiring ideas to implement in cooperation with appropriate partners. Among the panellists will be Amelia Slocombe from the LMA, UK; Cathrin Niehaus, Head of US Private Placement Group from Deutsche Bank, UK; Head of Research – Credit Investments in Generali Investments Europe, France; Chris Lyons, CFA and Managing Director and Group Head at Voya Investments, USA, Scott Ashton, Of Counsel at Morrison & Foerster, UK and many others representing investors, issuers and the legal framework as well.