European quarterly institutional loan volume activity in €bn (estimated). Source: Pitchbook | LCD Data through March 11, 2024
It is fairly well known in our circles at least that loan-to-own distressed debt investors have been raising capital to purchase debt positions as a pathway to taking ownership of financially stressed companies via debt-for-equity swaps, and then make operational improvements to try to return assets to profitability.
The playbook these funds follow is best actioned during times of economic stress – once the debt is acquired, when value breaks inside creditors positions, the debt holders offer a debt exchange to de-lever the company (loan for own), usually preliminary to a later equity raising….
