Guest: Thomas Grau, Head of Acquisition Finance Germany; Amber Glaeser, Director; Ivan Seneka, Director – at Bank of Ireland
Topic: Mid-Market LBOs & the Blurring Line Between Funds and Banks / Finding Growth Together: When Banks and Funds Team Up
A Bank Building Its Own Private Credit Partnership: Bank of Ireland on Its First Year With Kennedy Lewis
Bank of Ireland’s Acquisition Finance team has spent the past year testing something few banks fully commit to: a direct, structured partnership with a private credit manager to commit large senior secured loans out of one hand. Announced in March, the tie-up with Kennedy Lewis targets over €2 billion for European mid-market buyouts, and the platform has already closed four transactions, three add-ons and one fully bilateral deal.
We spoke with Thomas Grau (Head of Acquisition Finance Germany), Amber Glaeser (Director) and Ivan Seneka (Director) about how the partnership works in practice, where the real competition sits, and where the market goes from here.
Thomas, you’ve been with Bank of Ireland since 2008, heading the German Acquisition Finance team since 2012. Ivan joined in 2010, and Amber in 2023 as a Director – a lot of experience between the three of you. How do you see the German leveraged finance market developing today?
Thomas: It’s a very attractive market, underpinned by a broad set of players, so it’s always evolving. We’re seeing M&A resistance driven by global uncertainty, weak GDP growth and AI as either a disruptor or an enabler. But LBO financing remains an unavoidable discipline in corporate finance, and senior debt is a good financing solution also in the future.
Amber: There’s significant capital chasing a limited pool of high-quality assets, on both the sponsor and lending side. Given how long many PE-owned assets have been held, we’d expect exit and refinancing activity to pick up, though sentiment has turned more cautious in some sectors, software being one.
Ivan: What’s underappreciated is that although we’re arguably in a crisis or economic turmoil, the transaction market isn’t behaving like we are. In previous downturns, you’d see players go risk-off. That’s not happening now. Deal volume is there, even if quality is volatile, and nobody, banks or funds, is really pulling back.
In March, Bank of Ireland announced a strategic partnership with Kennedy Lewis to jointly deploy over €2bn in senior secured loans for European mid-market buyouts. What was the thinking behind it, how does it work in practice, and how does it broaden your team’s product range?
Thomas: This builds on a long road: BOI carried mezz, second lien and small equity positions before the financial crisis, and later added a unitranche sub-bucket alongside super senior RCF and first-out. Finding the right partner for a bigger, dedicated senior bucket took time, we needed the right risk appetite and an entrepreneurial mindset. With Kennedy Lewis, that fit clicked: by the end of August we’d already closed four transactions, three add-ons and one fully bilateral deal, and the experience has been very positive.
Ivan: Having the firepower to write a large senior ticket alone is an advantage, but it doesn’t guarantee the deal, you’re still competing against unitranche and bank club deals. It gives us speed, since there’s no club to assemble, lower legal cost, and less management time fielding multiple lenders. Getting that operating model established on our own terms, within the credit box we’d defined, was genuinely the hard part.
Amber: BOI originates and stays the sponsor’s single point of contact throughout the holding period. Our credit process and Kennedy Lewis’s run in parallel so nothing loses time, and BOI handles the legal workstream. That upfront work is why it ran smoothly from day one, though as our first fully bilateral deal, there were still lessons learned for next time.
While banks are partnering with private credit managers, those same managers have increasingly moved into territory that used to be exclusively banks’ – senior debt, club-style structures. What’s your take on this development?
Ivan: A lot of traditional bank competitors have pulled back or exited the mid-cap over the last decade. For senior structures, we don’t see private credit managers as competitors so much as collaborators, they are happy to form senior clubs or often want to participate if we underwrite. With this partnership behind us, we’ve got an even stronger case for sponsors to choose us. Our real competition is still unitranche, and it’s increasingly fought on leverage and pricing.
Amber: Pricing is the most recent shift. It’s always been a competition on leverage against unitranche, but with pricing in some cases coming down toward 475bps, the differential to bank debt isn’t what it used to be.
Thomas: The market’s still attractive, if not at the return levels of ten or fifteen years ago. Global liquidity means investors need this financing as part of how they manage capital. You’ve got asset managers leveraging their own networks, and investors without a European footprint looking for a partner with aligned risk appetite. That’s exactly the gap Kennedy Lewis and BOI fill for each other.
Based on all this, what are the next steps for your team?
Thomas: It’s about conversion. We’ve taken several transactions to the final stage and lost them because of the process, not through fault of the product. This is a senior debt product, not unitranche, and we believe in it. With the agency capability we already have, we can deliver the whole package from one place.
Amber: Offering agency and FX hedging alongside the lending is something only a bank partnership brings. Kennedy Lewis isn’t the only tool either, we can still run normal senior clubs, underwrite with a Kennedy Lewis anchor ticket to cut syndication risk, do super senior, or take a slice of unitranche.
Hot take: what’s one view you have on the German leveraged finance market that most of your peers would disagree with?
Ivan: In this market environment lenders need to get used to financing assets that aren’t growing, but still can make a compelling debt story.
Amber: After the next economic crisis, regulation for private credit is going to get a lot harsher, and that will level the playing field between banks and funds.
Thomas: Being an optimist is like buying a computer, there’s always a better one coming next quarter. But you still have to invest, and you can still make good investments, because there are smart people around. And sometimes I’d appreciate better collaboration.
This interview is part of Leverest Credit Talk — featuring senior voices from across the private credit and leveraged finance landscape. Learn more about Leverest → leverest.net