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Bailey McCann, Opalesque New York:

2021 was a big year for private debt, according to new data from PitchBook. Private debt funds raised $191.2 billion, a 12.1% increase over last year and the second highest year on record. As of 2021, private debt is now the third largest private market strategy by asset size, trailing only private equity and venture capital.

The private debt market has grown in popularity as a source of financing for leveraged buyouts and other private market transactions. As a result, private debt fund managers are raising larger funds than ever before, according to PitchBook data. The median direct lending fund size reached $900.0 million globally in 2021.

While that may sound like a lot, PitchBook's analysis suggests that it may not be enough. There is less dry powder on hand in private debt today than there was in 2018. With private equity deal activity reaching a fever pitch, and non-sponsor M&A transactions coming to the private debt market for financing, direct lending funds have plenty of places to put money to work.

Uncertainty ahead

While deal activity is likely to remain elevated throughout 2022, private debt funds may face a few headwinds this year. The pandemic recovery has been uneven, which could add a measure of risk to private debt portfolios if businesses that were once thought to be strong have diffi......................

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