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Alternative Market Briefing

Private debt fundraising slows down

Monday, October 03, 2022

Bailey McCann, Opalesque New York:

Private debt fundraising seems to have hit a speed bump following a record-breaking 2021. New PitchBook data shows that private debt managers raised $82.0 billion across 66 funds globally in the first six months of the year, however, H1's total accounts for less than 40% of that trailing 12-month figure.

PitchBook suggests that the selloff in equities markets may be partly to blame for the slowdown in activity as investors reassess their portfolios and pause any new allocations. For investors with target allocations, the problem can be especially acute. As those portfolios sell out of listed equities they may end up temporarily over-allocated to other asset classes and have to manage their total exposure before putting capital to work. These are likely to be temporary conditions, however. PitchBook analysts suggest that growth is likely to return to the asset class later this year and into the first half of 2023.

Private debt funds are reacting to these current market conditions with a bit of volatility. Q4 2021 private debt performance came in at 3.2%, which was higher than the third quarter's 0.6% return. But the preliminary Q1 2022 figure from PitchBook shows another pullback down to 0.6%. Rising rates and rising inflation have eroded some performance gains for income assets.

"Given the limited upside-and hopefully limited downside-of private debt due to the return of capital plus interest characteristics that provi......................

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