Investors are getting better returns from private credit than they would from private equity, new data shows.
The State Street Private Equity Index, which analyses data from around 3,900 funds with $4.8trn (£3.8trn) in capital commitments, found that private debt funds returned 2.61 per cent to their investors in the second quarter of 2023.
In contrast, private equity funds returned 2.29 per cent, according to a Bloomberg report which cited the data.
Private credit has beaten private equity in all but one quarter since the start of 2022, according to the index.
Private equity firms have been expanding into the lucrative credit space in recent months as higher interest rates have led to higher returns.
“Private equity is in a challenging environment, with exit multiples under pressure,” Keith Miller, global head of product, private debt, at Apex Group, told Alternative Credit Investor last month.
“Credit is being seen as a great alternative when you look at it on a risk return basis.
“We’re seeing a lot more interest in credit. Traditional private equity houses are looking at credit structures and credit funds.”