Mezzanine boosted by debt gap

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Mezzanine is making a comeback. Summit Partners (page 8) and Partners Group (page 9) both recently announced final closes for their latest mezzanine funds at $825m and EUR447m respectively. This renaissance is what the mezzaneurs have been readying for over the past 18-24 months. Figures for 2007 show that mezz use has increased across all deal size ranges; steadily for the most part in spite of the 2006 slump that affected the EUR[s40]250m-EUR<500m and EUR[s40]500m-EUR<1bn ranges.

Southern Europe paints a quite different picture; the use of mezz has fluctuated considerably from one deal range to the next over the last six years. Aside from an increase in 2007 in the EUR<50m and EUR[s40]250m-EUR<500m ranges, the presence of mezz in Southern Europe remains discrete. The credit crunch and a decrease in deal flow have heightened this irregular presence over the last eight months.

Yet sector experts express optimism. The overall pie has shrunk but mezz providers believe their slice of it is increasing. In the less sophisticated markets of Southern Europe the phenomenon might be slow in coming.