Private Debt Fund Management Industry Surpasses Half A Trillion Dollars by Preqin

Total industry AUM grows to $523bn as of June 2015, up from $483bn at the end of 2014

The 2016 Preqin Global Private Debt Report finds that the industry continued its robust growth in 2015, with total assets under management (AUM) reaching $523bn as of June. This extends the year-on-year growth in AUM seen since 2006, when combined assets under management totalled $156bn. The largest proportion of these assets are held in distressed debt funds, which have a combined $199bn in AUM. Mezzanine funds hold $130bn, while direct lending funds have seen the fastest rate of growth, and now oversee $115bn in total assets.

In particular, growth in the European private debt market has been rapid, and funds focused on the region accounted for 35% of the $85bn raised by private debt funds globally in 2015, the highest annual proportion ever recorded. The key driver in this area has been the direct lending market, which secured $19bn in investor commitments in 2015 and now holds $29bn in dry powder available for investment. This level of fundraising significantly surpasses the $13bn raised by North America-focused direct lending funds through the year, the first time this has occurred.

Private Debt Fund Management

Key 2016 Global Private Debt Report Facts:

  • Dry Powder: Total dry powder in the private debt industry stands at $191bn as of the end of 2015. Despite representing the largest proportion of this, $120bn worth of North America-focused dry powder does not match the record $124bn seen at the end of 2013.
  • AUM by Vintage Year: Private debt funds with 2013 – 2015 vintages hold $223bn of total industry assets, reflecting the growth of the asset class in recent years. Funds with vintages prior to 2010 currently hold $145bn in total.
  • Funds in Market: As of February 2016, there are 260 private debt funds on the road seeking aggregate capital commitments of $123bn. This is an increase in the number of funds compared to the same point the previous year (234) but a decrease in the aggregate target capital ($130bn).
  • Asia and Rest of World: Asia and Rest of World secured just 7% of capital committed to the industry globally, raising $5.7bn. However, private debt is growing in prevalence in these regions, and there are currently 42 funds in market targeting a combined $11bn.
  • Investor Confidence: Given the growth in private debt, it is unsurprising that over a quarter (26%) of investors have grown in confidence in the asset class over the past twelve months, and just 7% have reduced in confidence. The majority of investors (54%) generally perceive the private debt industry positively.

Private Debt Fund Management

Comment:

“Private debt received a resounding mark of approval from the institutional investor community in 2015, and sustained investor confidence testifies that the asset class can provide strong, risk-adjusted returns. With private lending providing an alternative fixed income-style product, the industry should continue to feature prominently in investors’ portfolios over the coming years, and allocation increases are expected to bolster fundraising further.

Private Debt Fund Management

Developed regions and experienced fund managers have attracted the majority of investor capital as the fundraising landscape becomes increasingly competitive, and investors look for secure returns. Europe’s burgeoning direct lending market, especially, should play an increasingly influential role in the development of private debt after its record-breaking year of fundraising.”

Ryan Flanders – Head of Private Debt Products, Preqin

Private Debt Fund Management