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Global private debt funds secured $33bn of capital through 22 funds in Q1 2022

Wednesday, April 20, 2022

Laxman Pai, Opalesque Asia:

Global private debt funds secured $33bn of capital through 22 funds in Q1 2022, a softer quarter compared to Q1 2021, which saw $43bn raised by 59 funds, said a study.

According to Preqin's Private Debt Quarterly Report, this trend is partially driven by significant macro risks as well as potential over-allocation by some investors, following 2021 which was a record year for private debt fundraising.

"The private debt funds enter 2022 with a softer quarter compared to the same period in 2021," the report pointed out.

The Preqin report also shows that, following the fundraising success of 2021, the number of funds in the market jumped by almost a third (32%) compared to last year to 723 at the beginning of 2022. Q1 saw a more modest increase of 1% and a drop in capital targeted of -0.3%.

Preqin analysts note this moderation of funds in the market is most likely driven by the volatility in the market, and uncertainty about inflation, rate hikes, and broader macro-economic outlook. Some investors may have over-allocated to some popular strategies like direct lending. Therefore, some softening in fundraising can be expected.

Whether this subdued activity continues through the year will depend on investors' interest rate outlook. While rates have not been a top priority in recent years, the prospect of an inflationary period - whether a temporary spike or a prolonged surge - could encourage some investors to dial down the......................

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