Private debt AUM passed $1.6trn last year amid “explosive” growth
The private debt market was worth $1.6trn (£1.26trn) by the second quarter of 2023, with “explosive” growth in the direct lending sector, new data has shown.
According to PitchBook’s 2023 Annual Global Private Markets Fundraising Report, total assets under management (AUM) for private debt inclusive of semiliquid retail funds was closer to $1.8trn.
“Looking just at institutional drawdown funds, growth has been most explosive in direct lending, private debt’s largest substrategy, which surpassed $550bn in AUM in 2023, up from $91.4bn 10 years ago,” the report found.
Read more: Private markets predicted to continue outperforming listed stocks
Secondaries fundraising reached its second-highest level in a decade, with $78.3bn secured across 72 funds – a 60.5 per cent year-on-year increase. Pitchbook noted that this shows “the degree to which 2023 fundraising was driven by a handful of extremely large fund closings.”
The report covered seven private market strategies – private equity, venture capital, real estate, real assets, private debt, fund of funds, and secondaries. It found that while private debt grew last year, overall it was not a record year for private markets fundraising.
Private capital fundraising was found to be 20.5 per cent lower than 2022’s totals with 48.4 per cent fewer funds closed.
Read more: Alternative lenders and private debt funds fill SME funding gap
Private equity was down by 1.1 per cent last year, while venture capital fell 47.3 per cent. Real assets were down by 42.9 per cent and real estate closed on 41.9 per cent less capital.
Commitments to private real estate funds hit their lowest point since 2011, with just $83.5bn raised by 200 vehicles in 2023.
“For LPs with capital to commit this year, this moment should be a call to action,” said Hilary Wiek, senior strategist at PitchBook.
“GPs are still trying to raise more and bigger funds than there is capital to be committed, which may mean they are feeling more humble than usual. LPs can use this moment to push for better terms when negotiating their commitments.”
Read more: JPMorgan in talks to expand its private credit business
