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Alternative Market Briefing

Private debt funds hit record with 420 vehicles but fundraising slows down

Friday, July 12, 2019

Laxman Pai, Opalesque Asia:

New private debt funds have continued to come to market through Q2 2019, and there are now a record 420 vehicles on the road, according to Preqin quarterly update on private debt.

Having spiked to $192bn at the start of the quarter, though, the total capital sought in the asset class has fallen back to $185bn, suggesting either that new funds on the road are smaller than those closed, or that funds are generally lowering their target sizes.

Direct lending vehicles still dominate the market, accounting for around half (203) of all vehicles on the road and more than half ($98bn) of the capital sought.

Of particular note is the lack of distressed debt funds: there are 53 in market at the start of Q3, fewer in number than mezzanine funds (70).

What is more, distressed debt funds are targeting just $30bn collectively, less than was raised in either 2016 or 2017 alone, said Preqin.

Perhaps more concerning for the industry, many of the funds seeking capital have been on the road for some time.

Almost three-quarters have been on the road for more than a year, and 23% for more than two years.

New funds coming to market are likely to take some time to secure commitments from investors, and many may find it difficult to reach a final close.

Slump in private debt fundraising continues in Q2

According to Preqin, the recent slump in private debt fundraising continued in Q2 2019, as just 29 funds reached a fi......................

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