Publication of the Aether FS Unitranche France Index for the first quarter of 2023

In the first quarter of 2023, the Aether FS Unitranche France index, published by Aether Financial Services (AFS), has risen again, with a margin per leverage round of 1.43% for 17 tranches analyzed. This increase in the index is the result of a squeeze effect between a further decline in leverage observed at closing, offset by a significant rise in margin. Aether FS also announces its application for the Payment Institution (PI) license, allowing it to operate as a Payment Service Provider (PSP).

The Aether FS Unitranche France Index serves as a benchmark for market conditions in the Private Equity sector and enables the assessment of the cost per leverage round (excluding the base rate) in unitranche transactions in France.

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displaying an average leverage at closing of 4.22x

(-3% compared to Q4 2022). However, average margins at closing have risen again, following a very low Q4 2022 for this type of financing. With an increase of +0.3% compared to the previous quarter, the average margin at closing reaches 5.79%.

The analysis of the 17 transactions in the Q1 2023 index more generally reflects the slowdown in activity that occurred in the second half of 2022, both in terms of fundraising (€8.5 billion raised in the second half, compared to €17 billion in the first half¹) and the amounts invested in private equity (€24.7 billion in 2022, compared to €27.1 billion in 2021¹). Investors remain cautious regarding new opportunities and are primarily focusing on deals that exhibit conservative leverage with a more attractive average return than the previous quarter.

Aether Financial Services on track to become a Payment Service Provider

Private equity transactions are increasingly facing challenges related to financial flow management. Since 2020, the number of participants and underwriters in financing circuits has significantly increased, making the management of flows during closings and drawdowns a considerable issue.

In this context, Aether Financial Services has submitted an application for approval to the ACPR to become a Payment Service Provider (PSP). This will enable AFS to manage its clients' financial flows by receiving funds from lenders and redirecting them to borrowers, particularly in syndication operations involving a large number of participants.

Obtaining this approval would allow Aether Financial Services to offer its clients a comprehensive solution that meets all their needs through a highly integrated service. If this development is confirmed, it will necessitate a restructuring of teams, particularly with a strengthening of the teams based in London, as well as the valuation, compliance, and IT support teams. AFS is therefore considering new recruitments, aiming to reach 50 employees by 2024.

¹ Study published by France Invest in partnership with Grant Thornton.