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Alternative Market Briefing

Private debt fundraising lagged in 2019

Monday, January 13, 2020

Laxman Pai, Opalesque Asia:

More than 200 private debt funds closed in each year from 2015 to 2018. But 2019 fundraising lagged, and at the end of the year just 152 funds have reached a final close, said Preqin.

Fundraising has also dropped to $107bn, the lowest annual total since 2015. Lower fundraising means dry powder dropped from $292bn at the end of 2018 to $261bn a year later.

Despite these difficulties, fund managers continue to launch new vehicles, and the private debt fundraising marketplace is now more crowded than ever.

At the start of 2020, 436 funds are seeking a total of $192bn from investors, up from the 399 funds that sought $168bn at the start of 2019. Unless fundraising rebounds significantly in 2020, it seems likely that many of these funds face a long road to raise capital.

"Private debt has been the expansion story of the past decade, but the shine has worn off this narrative in 2019," said Tom Carr, Head of Private Debt.

Private equity funds raise $595bn in 2019

Meanwhile, private equity funds closed in 2019 raised more than $0.5tn for the fourth year in a row, at $595bn, said Preqin.

Deal-making was also strong: 2019 saw $393bn in buyout deals and $224bn in venture capital deals announced, compared with $493bn and $271bn respectively in 2018.

The impact of high valuations on future performance has weighed heavily on fund managers, and many have been slowing the pace of their deal-making to avoid overpaying for acquis......................

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