Preqin: Private Debt Fundraising Lagged in 2019

February 19, 2020 | Alternative Investments, News

A new report from Preqin shows that private debt activity slowed down over 2019. Dealmaking also lagged from 2018.

The report shows that more than 200 private debt funds closed every year from 2015 t0 2018.

Last year, however, just 152 funds reached their final close and raised $107 billion. That latter figure represented an 11% decline from 2018. Dry powder slipped from $292 billion to $261 billion over the course of a year.

“Private debt has been the expansion story of the past decade, but the shine has worn off this narrative in 2019,” said Tom Carr, Head of Private Debt. “Suggestions that the market has reached saturation are not fully substantiated, but many investors do seem to be holding off on making commitments, and fundraising has seen its largest ever year-on-year decline.”

What Fueled the Downturn in Available Capital?

The new Preqin report noted the first decline in dry powder since 2014. The report says that more managers are putting money to work. In fact, they’re deploying more capital at a faster pace than they are raising capital.

Despite that concern, we are seeing new funds and vehicles emerge. This year, 436 funds sought about $192 billion. Both numbers are up, respectively, from 399 funds seeking $168 billion. This could be a challenging year to raise money, but Preqin isn’t sounding any alarm.

Tom Carr noted that “long-term appetite among investors remains robust.” He said in a statement that “fund managers certainly believe that there is significant potential yet to be tapped. They will point to declining dry powder as an indication that they are still able to put capital to work, and this may prompt investors to start making commitments again and boosting 2020 fundraising activity.”

Recent: Research from Preqin Shows Funds Lost $34.4 Billion in Q3

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