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Laxman Pai, Opalesque Asia: Distressed debt funds on the road number an all-time high of 70 as managers prepare to deploy significant capital in the aftermath of COVID-19, said Preqin.
"The number of distressed debt funds looking to raise capital has reached a new record. The 70 such funds in the market represent a combined $72bn in the capital targeted - this is more than double the amount of capital targeted by distressed debt funds at any point during 2019, and higher than at any point since 2016," said Preqin in its report.
Many large and established private debt managers are seeking significant capital in search of new opportunities.
Preqin data shows that private debt firms have been building up distressed debt funds over several years. There is currently $68bn in dry powder (as of June 2020); this compares with $41bn as of December 2014. These capital reserves are widely expected to fall in the coming months given the significant defaulting likely in the aftermath of the COVID-19 crisis.
The industries most affected by the economic impact of lockdowns imposed across the globe - such as hospitality, sports, and entertainment - are expected to receive the bulk of this new investment.
Several established firms have announced new funds in the midst of the pandemic, driving the surge in distressed debt capital targeted.
While funds targeting distressed North American companies constitute 74% of capital targeted by distressed debt funds...................... To view our full article Click here
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