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Alternative Market Briefing

Private debt fundraising nosedives as managers struggle to attract capital from investors

Thursday, April 09, 2020

Laxman Pai, Opalesque Asia:

Fundraising in private debt slumped substantially over the first quarter of 2020, as fund managers evaluate the potential fallout from the economic volatility caused by the outbreak of COVID-19, said a study.

A bleak picture emerged in the private debt fundraising market in the quarter, with total capital raised 41% lower compared with Q1 2019, revealed Preqin Quarterly Update: Private Debt. The Q1 2020 represents the worst fundraising quarter for the asset class since Q3 2016.

" Only 25 funds closed, raising a combined $14bn in capital, which is 41% less than the amount raised in Q1 2019," stated the report.

Although private debt fundraising has followed a cyclical pattern over the past five years, whereby capital raised in Q1 is typically lower and fundraising picks up again during Q2, both totals are considerably below the average for Q1 in recent years.

Private debt funds focused on North America typically dominate the fundraising market, but in Q1 the balance shifted somewhat.

Although the region accounted for just over half of total capital raised, Europe-focused funds represented 46%, and this was achieved from over half the number of funds closed.

Although only three special situations funds closed in Q1 2020, the fund type accounted for over 20% of total private debt fundraising.

One such fund is AG Credit Solutions Fund, which is managed by New York-based Angelo, Gordon & Co. and raised $1.8bn.

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