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Alternative Market Briefing

88% of private debt investors to commit more in the coming months: Preqin

Thursday, August 29, 2019

Laxman Pai, Opalesque Asia:

Private debt investors remain committed to the asset class, with a significant 88% looking to commit more, or the same amount of, capital to funds over the next 12 months, the largest proportion in the past three years.

As the private debt continues to grow into an established and standalone asset class, with more players than ever before, competition for lending opportunities becomes a top concern among investors.

In Preqin H2 2019 investor survey, 61% of investors cited this as a key challenge for return generation in the next 12 months. Other significant challenges include credit spreads (48%) and credit profiles (47%).

Direct lending remains the most sought-after strategy among private debt investors, with almost half (49%) believing the strategy presents the best opportunities for the coming year.

Appetite for special situations and mezzanine funds is on the up, though: at the start of H2 2018, just 19% and 20% of investors intended to target these strategies respectively in the next 12 months, whereas this has now increased to 48% and 42%.

Investors are evidently looking to move towards a more favorable risk/return profile in the current market environment.

Most private debt investors will look to target the established markets of the US and Western Europe (excluding the UK) in the year ahead.

Investors will also be looking at opportunities in the UK, with almost a quarter (23%) believing it presents t......................

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