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Alternative Market Briefing

Private debt funds secured $107bn in 2019, 11% less than 2018

Friday, February 14, 2020

Laxman Pai, Opalesque Asia:

Private debt activity slows sharply in 2019 as fundraising and dealmaking both declined from 2018 levels. However, new funds have continued to crowd into the marketplace.

According to Preqin, more than 200 private debt funds closed in each year 2015-18. But 2019 fundraising has lagged, and at the end of the year just 152 funds have reached a final close.

Collectively, those funds secured $107bn, the lowest annual total since 2015 and an 11% decrease compared to 2018. Lower fundraising has seen dry powder fall, going from $292bn at the end of 2018 to $261bn a year later.

The report said that despite these difficulties, fund managers have kept launching new vehicles, and the private debt fundraising marketplace is now more crowded than ever.

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

Meanwhile, dry powder has retreated from its peak of $292bn seen at the end of 2018 and sits at $261bn as of December. This is the first decline in dry powder since 2014 and reflects that fund managers have deployed capital at a faster pace than they have raised it through the year.

Looking ahead, at the beginning of January, there are 436 funds in the market targeting a combined $192bn. This is a substantia......................

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