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Direct lending most favoured debt strategy among funds in market

Private debt fundraising and funds currently in market are examined in this extract from the Preqin Quarterly Update: Private Debt, Q1 2015.

Fundraising in Q1 2015

Q1 2015 saw 19 private debt funds reach a final close, securing an aggregate USD16 billion in commitments. This is a drop on the USD22 billion raised in Q4 2014 by 28 funds, but an increase on the amount of capital raised in the first quarter of 2014, when USD12 billion was accumulated (Fig 1). 

Mezzanine fundraising accounted for the vast majority (70%) of capital raised in Q1 2015, with the bulk of this being raised by GS Mezzanine Partners VI, which closed in February having raised USD8 billion. Direct lending accounted for most (24%) of the remaining capital raised in the quarter, with limited capital raised across other debt strategies.

North America continued to dominate the fundraising market in Q1 2015, with funds closed during the quarter that target the region raising an aggregate USD11.8 billion; however, this figure is again primarily made up of Goldman Sachs Merchant Banking Division’s USD8 billion mezzanine fund. Two Europe-focused funds held a final close raising a total of USD3.2 billion, while one Asia-focused fund raised USD330 million and one Rest of World-focused fund secured USD350 million.

Funds in Market

At the start of Q2 2015, there were 237 private debt funds in market targeting USD122 billion in aggregate capital commitments. Direct lending funds account for the highest proportion of these funds, both in terms of number and the amount of capital being targeted, as shown in Fig 2. 

A notable proportion of funds have been on the road raising capital for less than six months (29%), while a third of funds have been in market for more than 18 months.

North America continues to account for the largest amount of capital currently targeted (USD63 billion across 125 funds); however, Europe continues to grow as a region for private debt fundraising, with 66 funds looking to secure total commitments of USD46 billion (Fig 3). Outside of these more developed markets, private debt fundraising is also starting to gain increased traction, with a significant 46 funds in market looking to secure USD13 billion for investments in Asia and other regions outside North America and Europe.

 


Preqin releases quarterly reports covering private equity, hedge funds, infrastructure, real estate and private debt. All five quarterly updates can be accessed for free in our Research Center.

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