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Laxman Pai, Opalesque Asia: Weak fundraising in the private debt asset class during Q3 has also affected funds in the market, which are at record highs, said a study.
According to the Q3, 2021 Private Debt Quarterly Report published by Preqin, despite a large increase in the number of funds in the market (691 in October, compared to 547 in January 2021), the amount of capital they are seeking has remained relatively static.
"Investors are seeing new opportunities in private debt as economies start to return to normal. However, fundraising has yet to recover to anywhere near previous highs, as the number of funds closed during Q3 2021 was the weakest quarter since Q1 2016," said the report.
North America pulls ahead taking two-thirds of the capital raised in Q3 2021, with 22 North American private debt funds securing $27bn in Q3.
"The vast majority of investors plan to commit to one private debt fund in the next 12 months, at 73%, down 3 percentage points over the last 12 months. Some investors are looking to increasingly spread their bets, with an uptick in the proportion looking to commit to between 4-9 funds, up to 12% in Q3 2021 from 9% a year ago," the report said.
The bulk of these funds are targeting the dominant direct lending strategy (more than 50% by both number and aggregate capital targeted), which shows no signs of losing its place as investors' favorite.
Direct lending remains the preferred strategy with 70% of funds focusing on this strat...................... To view our full article Click here
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