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Alternative Market Briefing

Fundraising for the once-hot asset class private debt is cooling down

Friday, October 11, 2019

Laxman Pai, Opalesque Asia:

Once-booming asset class private debt funds secured just $22.1 billion, in the third quarter of 2019, the lowest quarterly haul since the first three months of 2018.

The $22.1 billion fundraise for that quarter followed 2017's blockbuster fourth quarter, which recorded $54.4 billion in capital commitments.

According to a new report from data provider Preqin, this time the quarter's fundraising stats are the continuation of an ongoing decline for the asset class.

However, as per a clear cyclical pattern whereby totals generally peak in Q4 of each year, and so 2019 totals may yet rise significantly.

Punctuating the poor fundraising performance this quarter, only a single fund type raised a meaningful amount of capital.

Usually the strongest performer in the asset class, direct lending funds accounted for 90% ($20bn) of all capital raised in Q3; the $49bn raised so far this year leaves them within reach of surpassing 2017's peak.

In the remainder of the asset class, only the mezzanine fund type has closed more than a single fund, and only mezzanine and special situations hit the $1bn mark in fundraising.

Europe-focused private debt funds bounced back in Q3

Europe-focused funds bounced back strong from a disappointing Q2, outpacing all other locations with $14bn raised.

In contrast, North America focused funds secured $6.5bn, almost half of their Q2 total, while Asia-focused funds held stable and in the rest ......................

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