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Dividend Recap snatches 8% 2019 YTD share –144% YOY increase

European Chart of the Week: 1st July 2019

Sponsors have been trying their luck with dividend payments in a lower M&A deal flow environment in 1H19, although some deals faced pushback from institutional investors due to aggressive terms or cashflow concerns.

European dividend recap-related financing increased 144% year to date to EUR 6.1bn, up from EUR 1.61bn, by the same time last year. These levels have not been seen since 2H16. A total of 11 dividend recap deals completed this year, two wrappers were pulled and two recently came to market — one of which is a capital reduction deal. Overall, dividend recaps accounted for 8% of loan volumes. Despite the surge in dividend recaps, investors pushed back on the dividend recap portion of German lenses manufacturer Rodenstock and data & technology provider ION Corporates’ deals.

Nonetheless, the overall market climate has proven favourable, as Belgian employment agency House of HR jumped in the pool with a capital reduction, launched yesterday (27 June) while French plant-based producer DRT joins today (28 June). In the run-up to quarter-end and the summer lull, dividend-related issuance has been up with EUR 1.4bn in June 2019 (month to date).

by Diana Apedu

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