Global private debt fundraising in 2023 slightly down from 2022
Global private debt funds raised $39.8bn (£31.4bn) in the last quarter of 2023, bringing the full-year total to $202.2bn.
Industry data provider Preqin found that 38 private debt funds closed in the fourth quarter, bringing the full-year total to 196 funds, and an average fund size of just over $1bn.
The $202.2bn raised last year was slightly behind the previous year, Preqin said, equating to 93 per cent of funds raised in 2022. However, Preqin said this was “a respectable fundraising score” given the “uncertain economic and interest-rate environment”.
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Preqin’s fourth-quarter private debt update also showed that 51 per cent of fundraising – $20.4bn – was by North America-focused funds. This was followed by $12bn raised by Europe-focused funds, while APAC- and rest of world-focused funds raised $5.5bn and $2bn, respectively.
Special situations funds raised $19.3bn in the last quarter across eight funds, equating to 48 per cent of capital raised in private debt. However, direct lending continued to lead in terms of the number of funds closed, at 16 funds.
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Preqin also cited its latest investor survey from November 2023, which found that investors are bullish on private debt as a reliable income stream.
90 per cent of 395 respondents said that the asset class has met or exceeded their return expectations.
45 per cent expect private debt to perform better over the coming 12 months, compared with the nine per cent that expect a weaker performance.
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“For much of 2023, market participants expected an imminent recession, due in part to the observable inverted yield curve,” said RJ Joshua, VP, head of private debt and fees, research insights, at Preqin.
“While this spread has come in substantially, the signals are still mixed for developed economies and may yet benefit more defensive strategies, such as private debt. Looking to 2024, we expect markets will remain data-sensitive as investors navigate the economy’s expected return to more subdued inflation.”
