Publication of the Aether FS Unitranche France Index for the Fourth Quarter of 2022

Following the trend observed in Q3 2022

, the Aether FS Unitranche France index, published by Aether Financial Services, recorded a further decline in the last quarter, standing at 1.31% per leverage round for 32 analyzed tranches.

The Aether FS Unitranche France Index has become a benchmark for market conditions in the Private Equity sector and allows for the assessment of the cost per leverage round (excluding base rates) in unitranche transactions in France.

Debt funds have managed to maintain an attractive risk/return correlation without impacting the expected IRR for their investors. This is reflected in a base rate effect that has further intensified this quarter.

decline in financing

was observed in the second half amid economic uncertainties and rising interest rates, which forced the market to adopt a more cautious approach.

The return of the 12-month Euribor to positive territory since April has notably led to more competitive closing margins to offset the rise in rates. Transaction structures have also been less leveraged than in the past.

Edouard Narboux, CEO and co-founder of Aether Financial Services, comments: “Caution prevails in the Private Equity landscape. Access to financing has become more expensive, and the rise in energy costs has adversely affected target margins, resulting in lower valuation levels. Fundraising has proven more challenging for players (Private Equity funds and debt funds). Nevertheless, debt funds continue to step in to compensate for banks' caution, maintaining a good acquisition momentum despite higher financing costs. These mixed trends are expected to persist into early 2023 with a still limited deal flow, but could gradually improve throughout the year.”.