Many U.S. loan market players have been paying more attention to the European loan market over recent months. This is because yield-hungry U.S. loan investors - who are trying to find alternative outlets for investment due to the scanty new deal supply in the U.S. market - see the European space as a source of alternative investment as it continues to become more active and, to a degree, more liquid.
DebtX, a full-service loan sale advisor for commercial debt, has decided to act on this market dynamic - developing and advancing its loan market by expanding its services overseas to Europe, specifically Germany. The move by the Boston-based firm represents an unprecedented initiative by a loan sale advisor to support a liquid secondary market for commercial bank debt in Germany, said Kingsley Greenland, founder, president and CEO.
"There's a lot of opportunity in Germany," Greenland said, explaining that DebtX has been working in Germany for over two years, but decided to make the formal plunge after it found an "excellent partner" in Munich-based Gunther & Partners. Also, DebtX decided to make the official move into Germany after observing the increasing amount of demand and activity taking place in the expanding European loan market, he said. Gifford West is heading up DebtX's European operations.
Indeed, banking reform in Germany has prompted a major balance sheet restructuring initiative by the country's financial institutions, with almost $300 billion in underperforming debt, according to McKinsey Quarterly research.
"DebtX has extensive expertise in helping financial institutions dispose of illiquid, non-performing debt and bringing together a large pool of buyers," Greenland said.
DebtX is gaining many new relationships through its partnership with Gunther & Partners, and, while not revealing whom or how many institutions DebtX is presently working with in Germany, Greenland said there is a decent mix between those institutions that have approached DebtX for its services and those that DebtX has approached.
DebtX is the largest online marketplace in the U.S. for commercial loans, with more than 2,500 registered buyers. The firm creates liquidity by analyzing, pricing and marketing a wide range of performing and non-performing loans and then aggregating buyers for the loans. Investors can conduct due diligence and bid online via DebtX's Web site. Standardized closing and legal documents streamline the secondary transaction process and expedite loan sales.
So far, DebtX's services in Germany have been well received, Greenland said, adding that he is confident that the great success of DebtX in the U.S. will be mirrored in Germany.