Rising corporate M&A an opportunity

By Mathieu Robbins

LONDON (Reuters) - The growing number of companies joining the frenzy of mergers and acquisitions is likely to boost revenue for banks issuing syndicated loans, said an executive from lender Barclays Capital on Wednesday.

While companies looking to do deals account for about half of the leveraged loan market in the U.S., they only make up less than one-fifth of Europe's market, said Graham Rainbow, a director at Barclays Capital, part of Barclays Plc (BARC.L: Quote, Profile, Research, Stock Buzz).

"So there is a huge difference in terms of Europe and the U.S. from non-sponsor driven leveraged activity, and we see that as an important growth area and one that we're going to focus some resource behind," Rainbow told the Reuters Hedge Fund and Private Equity Summit in London.

Merger and acquisition volumes have risen to an all-time high in Europe as companies flush with cash and ambitions to expand join private equity firms -- which have long been using debt to finance deals -- in bidding for assets.

Rainbow said Barclays Capital would sell on any such corporate-generated debt to the same investors that normally invest in private equity-related LBO debt as well as the borrowing companies' relationship banks.

Syndicated lending in the Europe, the Middle East and Africa (EMEA) market hit $225 billion in the first quarter as mergers and acquisitions financing took over from refinancing as the loan markets' mainstay, according to preliminary volume figures by Reuters LPC.

Acquisition financing of $119 billion dominated first quarter borrowing, but this was down 9 percent on 2005's record first quarter volume of $248 billion that was driven by refinancing activity.

M&A made up 53 percent of all first quarter lending.  Continued...