Private debt fundraising slows in third quarter

Private debt fundraising in closed-end vehicles slowed to a three-year low in the third quarter, meaning that the industry will “need to sprint” to exceed the $200bn (£158.8bn) mark for the fourth year running.

Analysis from PitchBook found that $31.7bn of private debt funds closed during the third quarter, the lowest figure since the third quarter of 2020 – putting 2023’s fundraising moderately behind last year’s as of the end of September.

The private markets data firm attributed the third-quarter slowdown to large funds staying open for longer.

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“The top 10 open funds by amount already raised $45.7bn in committed capital subject to a final close – a significant expansion from the prior-year total of $17.5bn,” PitchBook said. “In some cases, this is being done to allow more time to reach very ambitious targets, which are also up twofold from predecessor funds.”

In its third-quarter global private market fundraising report, PitchBook said that “the industry will need to sprint to surpass the $200bn mark for the fourth consecutive year.

“That is certainly plausible, however. The final quarter has never failed to deliver at least 30 per cent of annual fundraising in each of the last 10 years, and at an average of 36 per cent, that would be enough to just squeak by.”

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PitchBook’s report also revealed that the median time for 2023’s private debt funds to close is 19.2 months, which is said was “surprising… given how hot the topic has been on the conference circuit.”

It added that some private debt funds likely launched early for the trend but would have been able to reach a close subsequently due to the growing popularity of the asset class on the back of high interest rates.

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