Jan 31 2018 | 11:15pm ET
The private debt industry has grown AUM three-fold in the last ten years, according to new data from Preqin, hitting a record last year of $638 billion despite increased distributions to investors in recent years.
Although the net flow of capital to investors has been negative in 2015 and 2016, Preqin said, more than $90 billion returned to investors in each year, with a further $71 billion returned in the first half of last year alone. This raises the prospect that the private debt industry distributed more than $100 billion in a calendar year for the first time. The strong performance has spurred high fundraising levels, a trend which Preqin’s research suggests will continue: 42% of investors say they intend to commit more to private debt in the year ahead than they did in the 12 months prior.
Highlights from Preqin’s 2018 Global Private Debt Report:
“Given the sustained appetite among investors, and the fact that many plan to commit more fresh capital in the year ahead, indications are that the industry can maintain [the] rate of expansion in the months to come,” said Ryan Flanders, Head of Private Debt Products for Preqin. “However, there are dangers that come from growing too fast too quickly, and fund managers and investors alike are alive to concerns that the influx of capital to the asset class might make for a challenging deal making environment.
“Dry powder available to fund managers approached a quarter of a trillion dollars as of the end of 2017, and has created pricing pressure,” Flanders added. “Both fund managers and investors cited valuations as their top concern for 2018, and if fundraising continues at its current pace, these conditions are likely to intensify.”
Founded in 2003, Preqin is a leading source of information for the alternative assets industry, providing data and analysis via online databases, publications and bespoke data requests. More than 47,000 professionals in 90 nations use the company’s products.
Jan 30 2018 | 9:49pm ET
As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...
May 24 2017 | 9:25pm ET
Starting in 2019, financial industry executives sitting for the coveted Chartered...
Feb 14 2018 | 9:57pm ET
Tasked with delivering returns on client capital, a common dilemma for many alternative...